Cairns owns 80 percent of the voting stock of Hamilton, Incorporated. 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. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2020, Hamilton sold $2,100,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2022. Both companies utilize the straight-line method of amortization. Required: Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. a. December 31, 2022 b. December 31, 2023 c. December 31, 2024 view transaction list Consolidation Worksheet Entries < 1 2 3 Prepare Consolidation Entry B to account for these bonds on December 31, 2022. Note: Enter debits before credits. Date December 31, 2022 Accounts Debit Credit 7

SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 15CE
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Cairns owns 80 percent of the voting stock of Hamilton, Incorporated. 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.
Cairns uses the equity method in its internal records to account for its investment in Hamilton.
On January 1, 2020, Hamilton sold $2,100,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 9 percent
payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2022. Both
companies utilize the straight-line method of amortization.
Required:
Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
a. December 31, 2022
b. December 31, 2023
c. December 31, 2024
view transaction list
Consolidation
Worksheet Entries
<
1
2
3
Prepare Consolidation Entry B to account for these bonds on December 31,
2022.
Note: Enter debits before credits.
Date
December 31, 2022
Accounts
Debit
Credit
7
Transcribed Image Text:Cairns owns 80 percent of the voting stock of Hamilton, Incorporated. 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. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2020, Hamilton sold $2,100,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2022. Both companies utilize the straight-line method of amortization. Required: Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. a. December 31, 2022 b. December 31, 2023 c. December 31, 2024 view transaction list Consolidation Worksheet Entries < 1 2 3 Prepare Consolidation Entry B to account for these bonds on December 31, 2022. Note: Enter debits before credits. Date December 31, 2022 Accounts Debit Credit 7
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