Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1,20X3,which Star Corporation purchased.Pluto Corporation owns 65% of Saturn's voting shares.On Jan 1,20X7,Pluto Corporation purchased $120,000 face value of Saturn bonds from Star for $118,020.On the date Pluto purchased the bonds,the bonds' carrying value on Saturn's book was $126,019.The bonds pay 12 percent interest annually on December 31.The preparation of consolidated financial statements for Saturn and Pluto at December 31,20X9,required the following consolidating entry:

-Based on the information given above,if 20X9 consolidated net income of $50,000 would have been reported without the consolidating entry provided,what amount will actually be reported?

Question

Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1,20X3,which Star Corporation purchased.Pluto Corporation owns 65% of Saturn's voting shares.On Jan 1,20X7,Pluto Corporation purchased $120,000 face value of Saturn bonds from Star for $118,020.On the date Pluto purchased the bonds,the bonds' carrying value on Saturn's book was $126,019.The bonds pay 12 percent interest annually on December 31.The preparation of consolidated financial statements for Saturn and Pluto at December 31,20X9,required the following consolidating entry:
 
-Based on the information given above,if 20X9 consolidated net income of $50,000 would have been reported without the consolidating entry provided,what amount will actually be reported?

Quizplus · Accepted Answer

The Answer of Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1,20X3,which Star Corporation purchased.Pluto Corporation owns 65% of Saturn's voting shares.On Jan 1,20X7,Pluto Corporation purchased $120,000 face value of Saturn bonds from Star for $118,020.On the date Pluto purchased the bonds,the bonds' carrying value on Saturn's book was $126,019.The bonds pay 12 percent interest annually on December 31.The preparation of consolidated financial statements for Saturn and Pluto at December 31,20X9,required the following consolidating entry:
 
-Based on the information given above,if 20X9 consolidated net income of $50,000 would have been reported without the consolidating entry provided,what amount will actually be reported?

Saturn Corporation Issued $300,000 Par Value 10-Year Bonds at 107