SUB is an 80% owned subsidiary of PAR. SUB issued $100,000 of 8%, 10-year bonds for $95,000 on 1/1/2011. Annual interest is paid on 12/31/. PAR purchased the bonds on 1/1/2017, for $102,000. Both companies use the straight-line method to amortize the premium/discount on the bonds. 1/ How much gain or loss on retirement should be reported in 2017 consolidated statements a. 4,000 loss b. 2,000 loss c. 0 d. 2,000 gain 2/ The net adjustment needed to consolidated income in the consolidation process for 2017 is: (hint: complete the subsidiary income distribution schedule and calculate the surplus of a gain or loss on retirement and the interest adjustment) a. 3,500 decrease b. 3,000 decrease c. 4,000 decrease d. 1,000 increase 3/ The elimination and adjustment process for 2017 consolidated statements include: a. Credit Investment in Subsidiary Bond 102,000 b. Debit Interest Revenue 7,500 c. Credit Interest Expense 8,000 d. Credit Discount 500
SUB is an 80% owned subsidiary of PAR. SUB issued $100,000 of 8%, 10-year bonds for $95,000 on 1/1/2011. Annual interest is paid on 12/31/. PAR purchased the bonds on 1/1/2017, for $102,000. Both companies use the straight-line method to amortize the premium/discount on the bonds. 1/ How much gain or loss on retirement should be reported in 2017 consolidated statements a. 4,000 loss b. 2,000 loss c. 0 d. 2,000 gain 2/ The net adjustment needed to consolidated income in the consolidation process for 2017 is: (hint: complete the subsidiary income distribution schedule and calculate the surplus of a gain or loss on retirement and the interest adjustment) a. 3,500 decrease b. 3,000 decrease c. 4,000 decrease d. 1,000 increase 3/ The elimination and adjustment process for 2017 consolidated statements include: a. Credit Investment in Subsidiary Bond 102,000 b. Debit Interest Revenue 7,500 c. Credit Interest Expense 8,000 d. Credit Discount 500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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SUB is an 80% owned subsidiary of PAR. SUB issued $100,000 of 8%, 10-year bonds for $95,000 on 1/1/2011. Annual interest is paid on 12/31/. PAR purchased the bonds on 1/1/2017, for $102,000. Both companies use the straight-line method to amortize the premium/discount on the bonds.
1/ How much gain or loss on retirement should be reported in 2017 consolidated statements
a. 4,000 loss
b. 2,000 loss
c. 0
d. 2,000 gain
2/
The net adjustment needed to consolidated income in the consolidation process for 2017 is: (hint: complete the subsidiary income distribution schedule and calculate the surplus of a gain or loss on retirement and the interest adjustment)
a. 3,500 decrease
b. 3,000 decrease
c. 4,000 decrease
d. 1,000 increase
3/
The elimination and adjustment process for 2017 consolidated statements include:
a. Credit Investment in Subsidiary Bond 102,000
b. Debit Interest Revenue 7,500
c. Credit Interest Expense 8,000
d. Credit Discount 500
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