Fargus Corporation owned 61% 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, 2020, Sanatee sold $1,800,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 30% of these bonds on April 1, 2022, for 93% of the face value. Both companies utilized the straight-line method of amortization. f.     What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2023?

SWFT Corp Partner Estates Trusts
42nd Edition
ISBN:9780357161548
Author:Raabe
Publisher:Raabe
Chapter8: Consolidated Tax Returns
Section: Chapter Questions
Problem 36P
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Fargus Corporation owned 61% 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, 2020, Sanatee sold $1,800,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 30% of these bonds on April 1, 2022, for 93% of the face value. Both companies utilized the straight-line method of amortization.

f.     What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2023?

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