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Pallet Corporation owns 90% of the outstanding common stock of Stealth Company.On January 1, 2011, Stealth Company issued $500,000, 12%, ten-year bonds.
On January 1, 2013, Pallet Corporation paid $412,000 for Stealth Company bonds with a par value of $400,000 and a carrying value of $393,600.Both companies use the straight-line method to amortize bond premiums and discounts.Pallet Corporation accounts for the investment using the cost method of accounting.
-Pallet Corporation would report a balance in the Investment in Stealth Company Bonds account on December 31, 2013, of

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Use the following information to answer Questions 
Pallet Corporation owns 90% of the outstanding common stock of Stealth Company.On January 1, 2011, Stealth Company issued $500,000, 12%, ten-year bonds.
On January 1, 2013, Pallet Corporation paid $412,000 for Stealth Company bonds with a par value of $400,000 and a carrying value of $393,600.Both companies use the straight-line method to amortize bond premiums and discounts.Pallet Corporation accounts for the investment using the cost method of accounting.
-Pallet Corporation would report a balance in the Investment in Stealth Company Bonds account on December 31, 2013, of

Quizplus · Accepted Answer

The investment is initially recorded at cost, $412,000. The premium of $18,400 ($412,000 - $393,600) is amortized over the remaining life of the bonds. For 2013, the amortization is $1,500 ($18,400 / 8 years), so the balance on December 31, 2013, is $410,500 ($412,000 - $1,500).

Use the Following Information to Answer Questions