Pass Corporation owns 80% of Sindy Company,purchased at the underlying book value on January 1,2010.On January 1,2013,Pass also purchased $200,000 par value 6% bonds that had been issued by Sindy on January 1,2010 with a ten-year maturity(due January 1,2020).Annual interest is paid on December 31.Straight-line amortization is used by both companies.
At year-end 2013,the following entry was made on the consolidating worksheet.
Required:
1.How much did Pass pay for the bonds?
2.What is the book value of the bonds on the date of purchase?
3.What amount of interest income and interest expense must be eliminated in the entry above designated as (a)and (b)?

Question

Pass Corporation owns 80% of Sindy Company,purchased at the underlying book value on January 1,2010.On January 1,2013,Pass also purchased $200,000 par value 6% bonds that had been issued by Sindy on January 1,2010 with a ten-year maturity(due January 1,2020).Annual interest is paid on December 31.Straight-line amortization is used by both companies.
At year-end 2013,the following entry was made on the consolidating worksheet.  
Required:
1.How much did Pass pay for the bonds?
2.What is the book value of the bonds on the date of purchase?
3.What amount of interest income and interest expense must be eliminated in the entry above designated as (a)and (b)?

Quizplus · Accepted Answer

The Answer of Pass Corporation owns 80% of Sindy Company,purchased at the underlying book value on January 1,2010.On January 1,2013,Pass also purchased $200,000 par value 6% bonds that had been issued by Sindy on January 1,2010 with a ten-year maturity(due January 1,2020).Annual interest is paid on December 31.Straight-line amortization is used by both companies.
At year-end 2013,the following entry was made on the consolidating worksheet.  
Required:
1.How much did Pass pay for the bonds?
2.What is the book value of the bonds on the date of purchase?
3.What amount of interest income and interest expense must be eliminated in the entry above designated as (a)and (b)?

Pass Corporation Owns 80% of Sindy Company,purchased at the Underlying