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, 2012, 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, 2017.Both Phlora and Speshal use straight-line amortization.Phlora uses the equity method of accounting for its investment in Speshal.
Required:
Prepare elimination/adjusting entries on the consolidating work papers for the year ended December 31, 2012.

Question

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, 2012, 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, 2017.Both Phlora and Speshal use straight-line amortization.Phlora uses the equity method of accounting for its investment in Speshal.
  Required:
Prepare elimination/adjusting entries on the consolidating work papers for the year ended December 31, 2012.

Quizplus · Accepted Answer

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, 2012, 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, 2017.Both Phlora and Speshal use straight-line amortization.Phlora uses the equity method of accounting for its investment in Speshal.
  Required:
Prepare elimination/adjusting entries on the consolidating work papers for the year ended December 31, 2012.

Phlora Purchased Its 100% Ownership in Speshal Many Years Ago