Phauna paid $120,000 for its 80% interest in Schrub on January 1,2011 when Schrub had $150,000 of total stockholders' equity.
On January 1,2014,Phauna purchased $50,000 of Schrub Corporation's 8% bonds for $48,000.At that time,$100,000 of bonds had been issued by Schrub,and unamortized premium was $2,000.The bonds pay interest on June 30 and December 31 and mature on December 31,2018.Both Phauna and Schrub use straight-line amortization.Phauna uses the equity method of accounting for its investment in Schrub.
Required:
Prepare eliminating/adjusting entries for the bonds on the consolidating work papers for the year ended December 31,2014.

Question

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The Answer of Phauna paid $120,000 for its 80% interest in Schrub on January 1,2011 when Schrub had $150,000 of total stockholders' equity.
On January 1,2014,Phauna purchased $50,000 of Schrub Corporation's 8% bonds for $48,000.At that time,$100,000 of bonds had been issued by Schrub,and unamortized premium was $2,000.The bonds pay interest on June 30 and December 31 and mature on December 31,2018.Both Phauna and Schrub use straight-line amortization.Phauna uses the equity method of accounting for its investment in Schrub.
Required:
Prepare eliminating/adjusting entries for the bonds on the consolidating work papers for the year ended December 31,2014.

Phauna Paid $120,000 for Its 80% Interest in Schrub on January