Granite Company issued $200,000 of 10 percent first mortgage bonds on January 1, 20X4, at 105. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. Mortar Corporation purchased $140,000 of Granite's bonds from the original purchaser on December 31, 20X8, for $125,000. Mortar owns 75 percent of Granite's voting common stock. Granite's partial bond amortization schedule is as follows: Based on the information given above, what amount of premium on bonds payable will be eliminated in the preparation of the December 31, 20X8 consolidated financial statements?

Question

Granite Company issued $200,000 of 10 percent first mortgage bonds on January 1, 20X4, at 105. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. Mortar Corporation purchased $140,000 of Granite's bonds from the original purchaser on December 31, 20X8, for $125,000. Mortar owns 75 percent of Granite's voting common stock. Granite's partial bond amortization schedule is as follows:  Based on the information given above, what amount of premium on bonds payable will be eliminated in the preparation of the December 31, 20X8 consolidated financial statements?

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The Answer of Granite Company issued $200,000 of 10 percent first mortgage bonds on January 1, 20X4, at 105. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. Mortar Corporation purchased $140,000 of Granite's bonds from the original purchaser on December 31, 20X8, for $125,000. Mortar owns 75 percent of Granite's voting common stock. Granite's partial bond amortization schedule is as follows:  Based on the information given above, what amount of premium on bonds payable will be eliminated in the preparation of the December 31, 20X8 consolidated financial statements?

Granite Company Issued $200,000 of 10 Percent First Mortgage Bonds