(Module 1) On 1/1/06, Parco purchased in the open market 20% of its 100%-owned subsidiary's outstanding 8% bonds for $190,000. The outstanding bonds have a face value of $1,000,000 and a carrying value of $1,040,000 on 1/1/06. The maturity date of the bonds is 12/31/10. The subsidiary, Sarco, reported $300,000 of net income for 2006.
Required:
a. Prepare the general ledger entry required at 12/31/06 under the complete equity method.
b. Prepare the consolidation entry or entries required at 12/31/06.

Question

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The Answer of (Module 1) On 1/1/06, Parco purchased in the open market 20% of its 100%-owned subsidiary's outstanding 8% bonds for $190,000. The outstanding bonds have a face value of $1,000,000 and a carrying value of $1,040,000 on 1/1/06. The maturity date of the bonds is 12/31/10. The subsidiary, Sarco, reported $300,000 of net income for 2006.
Required:
a. Prepare the general ledger entry required at 12/31/06 under the complete equity method.
b. Prepare the consolidation entry or entries required at 12/31/06.

(Module 1) on 1/1/06, Parco Purchased in the Open Market