owned 51% of the voting common stock of Sanatee, Inc. The parent\'s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition price.
On January 1, 2010, Sanatee sold $1,400,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on January 1, 2012, for 95% of the face value. Both companies utilized the straight-line method of amortization.
What balances would need to be considered in order to prepare the consolidation entry in connection with these intra-entity bonds at December 31, 2012, the end of the first year of the intra-entity investment? Prepare schedules to show numerical answers for balances that would be needed for the entry.
Solution
the balaances considered should be about.......$1,30,000
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owned 51- of the voting common stock of Sanatee- Inc- The parent-'s in.docx
1. owned 51% of the voting common stock of Sanatee, Inc. The parent's interest was acquired
several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other
allocation was recorded in connection with the acquisition price.
On January 1, 2010, Sanatee sold $1,400,000 in ten-year bonds to the public at 108. The bonds
pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on January 1,
2012, for 95% of the face value. Both companies utilized the straight-line method of
amortization.
What balances would need to be considered in order to prepare the consolidation entry in
connection with these intra-entity bonds at December 31, 2012, the end of the first year of the
intra-entity investment? Prepare schedules to show numerical answers for balances that would be
needed for the entry.
Solution
the balaances considered should be about.......$1,30,000
