Senior Corporation acquired 80 percent of Junior Company's voting shares on January 1, 20X8, at underlying book value. On Dec. 31, 20X8, it also purchased $500,000 par value 8 percent Junior bonds, which had been issued on January 1, 20X5 to Partner Corporation (unaffiliated with either Senior or Junior) at a $45,000 premium. The bonds were originally issued with a 12-year maturity and pay interest annually on December 31. During preparation of the consolidated financial statements for December 31, 20X8, the following eliminating entry was included in the consolidation worksheet: Based on the information given above, what was the carrying amount of the bonds on Junior's books on the date of purchase?

Question

Senior Corporation acquired 80 percent of Junior Company's voting shares on January 1, 20X8, at underlying book value. On Dec. 31, 20X8, it also purchased $500,000 par value 8 percent Junior bonds, which had been issued on January 1, 20X5 to Partner Corporation (unaffiliated with either Senior or Junior) at a $45,000 premium. The bonds were originally issued with a 12-year maturity and pay interest annually on December 31. During preparation of the consolidated financial statements for December 31, 20X8, the following eliminating entry was included in the consolidation worksheet:  Based on the information given above, what was the carrying amount of the bonds on Junior's books on the date of purchase?

Quizplus · Accepted Answer

The Answer of Senior Corporation acquired 80 percent of Junior Company's voting shares on January 1, 20X8, at underlying book value. On Dec. 31, 20X8, it also purchased $500,000 par value 8 percent Junior bonds, which had been issued on January 1, 20X5 to Partner Corporation (unaffiliated with either Senior or Junior) at a $45,000 premium. The bonds were originally issued with a 12-year maturity and pay interest annually on December 31. During preparation of the consolidated financial statements for December 31, 20X8, the following eliminating entry was included in the consolidation worksheet:  Based on the information given above, what was the carrying amount of the bonds on Junior's books on the date of purchase?

Senior Corporation Acquired 80 Percent of Junior Company's Voting Shares