Senior Corporation acquired 80 percent of Junior Company's voting shares on January 1, 20X8, at underlying book value. On that date, it also purchased $500,000 par value 8 percent Junior bonds, which had been issued on January 1, 20X5, with a 12-year maturity. During preparation of the consolidated financial statements for December 31, 20X8, the following consolidating entry was made in the 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 that date, it also purchased $500,000 par value 8 percent Junior bonds, which had been issued on January 1, 20X5, with a 12-year maturity. During preparation of the consolidated financial statements for December 31, 20X8, the following consolidating entry was made in the 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

Since the bonds were purchased on January 1, 20X8, the carrying amount of the bonds on Junior's books on that date, which is also the purchase date, is their face value of $500,000.

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