A Parent Company owns 100 percent of its Subsidiary. During 2021, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $450,000 and the subsidiary reports net income of $180,000. The parent had a bond payable outstanding on January 1, 2021, with a carrying value equal to $378,000. The Subsidiary acquired the bond on January 1, 2021, for $355,500 During 2021, the Parent reported interest expense (related to the bond) of $31,500 while the Subsidiary reported interest income (related to the bond) of $28,800. What is consolidated net income for the year ended December 31, 2021? Select one: a. $655,200 b. $630,000 c. $632,700 d. $652,500

A Parent Company owns 100 percent of its Subsidiary. During 2021, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $1,840,000 and the subsidiary reports net income of $736,000. The parent had a bond payable outstanding on December 31, 2021, with a carrying value equal to $1,545,600. The Subsidiary acquired the bond on December 31, 2021, for $1,453,600. During 2021, the Parent reported interest expense (related to the bond) of $128,800 while the Subsidiary reported no interest income (related to the bond). What is consolidated net income for the year ended December 31, 2021?   b. $2,668,000 d. $2,796,800

Effects on consolidated financial statements of acquisition of affiliate's debt from non-affiliate On January 1, 2022, a Parent company has a debt outstanding that was originally issued at a discount and was purchased, on issuance, by an unaffiliated party. On January 1, 2022, a Subsidiary of the Parent purchased the debt from the unaffiliated party. The debt was purchased by the Subsidiary at a slight premium. The Parent is a calendar year company. Which one of the following statements is true? The consolidated balance sheet at December 31, 2022 will report none of the debt, and the consolidated income statement for the year ended December 31, 2022 will report a gain or loss from constructive retirement of the debt and will not report any interest expense from the debt. The consolidated balance sheet at December 31, 2022 will report the debt, and the consolidated income statement for the year ended December 31, 2022 will not report any interest expense from the debt. The consolidated…

Parent owns 100% of subsidiary. Subsidiary has bonds payable to third parties of $5,500,000., plus an unamortized premium with a credit balance of $500,000.  In 2022, parent purchases all outstanding bonds from third parties for $6,400,000. What result is reported in the 2022 consolidated financial statements.   a. Consolidated loss on “retirement” of bonds $400,000   b. No gain or loss is reported in the consolidated totals on this intercompany transaction.   c. Consolidated loss on “retirement” of bonds of $1,400,000   d. Consolidated gain on “retirement” of bonds of $1,100,000   e. Consolidated gain on “retirement” of bonds of $400,000

Assume that a Parent company acquires an 80% interest in its Subsidiary on January 1, 2020. On January 1, 2020, the book value of net assets and the fair value of the identifiable net assets equaled the book value of identifiable net assets (i.e. there was no AAP or Goodwill). The parent uses the equity method to account for its investment in the subsidiary. On December 31, 2021, the Subsidiary company issued $1,000,000 (face) 6 percent, five-year bonds to an unaffiliated company for $1,085,379.  The bonds pay interest annually on December 31, and the bond premium is amortized using the straight-line method.  This results in annual bond-payable premium amortization equal to $17,076 per year. On December 31, 2023, the Parent paid $974,229 to purchase all of the outstanding Subsidiary company bonds.  The bond discount is amortized using the straight-line method, which results in annual bond-investment discount amortization equal to $8,590 per year. The Parent and the Subsidiary report…

Consolidation adjustment necessary when affiliate's debt is acquired from non-affiliate Assume that a Parent company owns 65 percent of its Subsidiary. The parent company uses the equity method to account for its Equity investment. On January 1, 2015, the Parent company issued to an unaffiliated company $2,000,000 (face) 10 year, 10 percent bonds payable for a $100,000 premium. The bonds pay interest on December 31 of each year. On January 1, 2018, the Subsidiary acquired 30 percent of the bonds for $572,000. Both companies use straight-line amortization. In preparing the consolidated financial statements for the year ended December 31, 2019, what consolidating entry adjustment is necessary for the beginning-of-year Equity investment balance? $Answer Answer Credit

3-Assume that a Parent company owns 100% of its Subsidiary. On January 1, 2020 the Parent company had a $2,000,000 (face) bond payable outstanding with a carrying value of $2,140,000. The bond was originally issued to an unaffiliated company. On that same date, the Subsidiary acquired the bond for $1,992,000. During 2020, the Parent company reported $1,260,000 of (pre-consolidation) income from its own operations (i.e. prior to any equity method adjustments by the Parent company) and after recording interest expense. The Subsidiary reported $840,000 of (pre-consolidation) income from its own operations after recording interest income. Related to the bond during 2020, the parent reported interest expense of $220,000 while the subsidiary reported interest income of $190,000. Required: Determine the following amounts that will appear in the 2020 consolidated income statements. a. Interest income from bond investmentb. Interest expense on bond payablec. Gain (loss) on constructive…

Kk.25.

Consolidation adjustment necessary when affiliate's debt is acquired from non-affiliate Assume that a Parent company owns 65 percent of its Subsidiary. The parent company uses the equity method to account for its Equity investment. On January 1, 2015, the Parent (face) 10 year, 10 percent bonds payable for a $100,000 premium. The bonds pay interest on December 31 of each year. On January 1, 2018, amortization. In preparing the consolidated financial statements for the year ended December 31, 2019, what consolidating entry adjustment is necessary the Subsidiary $0 + Please answer all parts of the question. $2,000,000 use straight-line company issued to an unaffiliated company acquired 30 percent of the bonds for $572,000. Both companies for the beginning-of-year Equity investment balance?

4-Assume that a Parent company owns 80% of its Subsidiary. The Parent company uses the equity method to account for its Investment in Subsidiary. On January 1, 2019, the Parent company issued to an unaffiliated company $4,000,000 (face) 10 year, 10% bonds payable for a $260,000 premium. The bonds pay interest on December 31 of each year. On January 1, 2022, the Subsidiary acquired 30% of the bonds for $1,040,000. Both companies use straight-line amortization. In preparing the consolidated financial statements for the year ended December 31, 2023, what consolidating entry adjustment is necessary for the beginning-of-year Investment in Subsidiary account balance?