Pelami Corporation owns a 90% interest in Sunbird Corporation.At December 31, 2010, Sunbird had $3,000,000 of par value 6% bonds outstanding with an unamortized premium of $30,000.The bonds have interest payment dates of January 1 and July 1 and mature on January 1, 2015.
On January 2, 2011, Pelami purchased $1,200,000 par value of Sunbird's outstanding bonds for $1,210,000.Assume straight-line amortization.
Required:
Prepare the necessary consolidation working paper entries with respect to the intercompany bonds for the year ending December 31, 2011.

Question

Quizplus · Accepted Answer

The Answer of Pelami Corporation owns a 90% interest in Sunbird Corporation.At December 31, 2010, Sunbird had $3,000,000 of par value 6% bonds outstanding with an unamortized premium of $30,000.The bonds have interest payment dates of January 1 and July 1 and mature on January 1, 2015.
On January 2, 2011, Pelami purchased $1,200,000 par value of Sunbird's outstanding bonds for $1,210,000.Assume straight-line amortization.
Required:
Prepare the necessary consolidation working paper entries with respect to the intercompany bonds for the year ending December 31, 2011.

Pelami Corporation Owns a 90% Interest in Sunbird Corporation