Phlora purchased its 100% ownership in Speshal many years ago at a time when book values of assets and liabilities equaled market values.
On January 2, 2014, Phlora purchased $200,000 of Speshal Corporation's 6% bonds for $182,000. At that time, this was all of the bonds that had been issued by Speshal, and unamortized premium on Speshal's books was $3,500. The bonds pay interest on July 1 and January 1 and mature on January 1, 2019. Both Phlora and Speshal use straight-line amortization. Phlora uses the equity method of accounting for its investment in Speshal.

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The Answer of Phlora purchased its 100% ownership in Speshal many years ago at a time when book values of assets and liabilities equaled market values.
On January 2, 2014, Phlora purchased $200,000 of Speshal Corporation's 6% bonds for $182,000. At that time, this was all of the bonds that had been issued by Speshal, and unamortized premium on Speshal's books was $3,500. The bonds pay interest on July 1 and January 1 and mature on January 1, 2019. Both Phlora and Speshal use straight-line amortization. Phlora uses the equity method of accounting for its investment in Speshal.

Phlora Purchased Its 100% Ownership in Speshal Many Years Ago