SUB is a 90% owned subsidiary of PAR. SUB issued $100,000 of 8%, 5-year bonds for $96,110 on 1/1/2015, when the market rate was 9%. Annual interest is paid on 12/31/. PAR purchased the bonds on 1/1/2018, for $103,667, when the market rate was 6%. Both companies use the effective interest method to amortize the premium/discount on the bonds. 1/ How much gain or loss on retirement should be reported in 2018 consolidated statements? a. 3,667 loss b. 3,667 gain c. 5,427 loss d. 1,760 loss 2/ The net adjustment needed to consolidated income in the consolidation process for 2018 is: (hint: complete the subsidiary income distribution schedule and calculate the surplus of a gain or loss on retirement and the interest adjustment) a. 2,714 decrease b. 5,427 decrease c. 2,622 increase d. 2,805 decrease
SUB is a 90% owned subsidiary of PAR. SUB issued $100,000 of 8%, 5-year bonds for $96,110 on 1/1/2015, when the market rate was 9%. Annual interest is paid on 12/31/. PAR purchased the bonds on 1/1/2018, for $103,667, when the market rate was 6%. Both companies use the effective interest method to amortize the premium/discount on the bonds. 1/ How much gain or loss on retirement should be reported in 2018 consolidated statements? a. 3,667 loss b. 3,667 gain c. 5,427 loss d. 1,760 loss 2/ The net adjustment needed to consolidated income in the consolidation process for 2018 is: (hint: complete the subsidiary income distribution schedule and calculate the surplus of a gain or loss on retirement and the interest adjustment) a. 2,714 decrease b. 5,427 decrease c. 2,622 increase d. 2,805 decrease
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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SUB is a 90% owned subsidiary of PAR. SUB issued $100,000 of 8%, 5-year bonds for $96,110 on 1/1/2015, when the market rate was 9%. Annual interest is paid on 12/31/. PAR purchased the bonds on 1/1/2018, for $103,667, when the market rate was 6%. Both companies use the effective interest method to amortize the premium/discount on the bonds.
1/ How much gain or loss on retirement should be reported in 2018 consolidated statements?
a. 3,667 loss
b. 3,667 gain
c. 5,427 loss
d. 1,760 loss
2/
The net adjustment needed to consolidated income in the consolidation process for 2018 is: (hint: complete the subsidiary income distribution schedule and calculate the surplus of a gain or loss on retirement and the interest adjustment)
a. 2,714 decrease
b. 5,427 decrease
c. 2,622 increase
d. 2,805 decrease
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