Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company. The journal entries needed to remove the effect of intercompany bond transactions for 20X8.

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Answer 1

Question

Chapter 8, Problem 8.13E

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X8.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The amount of income assigned to non-controlling interest if net income of S company is $20000.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X9.

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E8-8A Constructive Year (Straight-Line Suspect Company issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $400,000 of Suspect's bonds from the original purchaser on January 1, 20X5, for $396,800. Prime owns 60 percent of Suspect's voting common stock. Note: Assume using straight-line amortization of bond discount or premium. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X5. Consolidation Worksheet Entries A Retirement at Beginning of Method) LO 8-2 B Record the entry to eliminate the effects of the intercompany ownership in Suspect bonds for 20X5. Note: Enter debits before credits. Event 1 Accounts Debit Credit

Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $410,000 at face value. Sep. 1 Acquired $930,000 of American Instruments' 10% bonds at face value. Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds. Oct. 2 Sold the Distribution Transformers bonds for $440,000. Nov. 1 Purchased $1,450,000 of M&D Corporation 6% bonds at face value. Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are American Instruments bonds M&D Corporation bonds (Hint: Interest must be accrued.) Required: 1. Prepare the appropriate journal entry for each transaction or event during 2021, as well as any adjusting entries necessary at year end. 2. Indicate any amounts that Ornamental Insulation would report in its 2021 income statement, 2021 statement of comprehensive income, and 12/31/2021 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and…

Answer 2

Question

Chapter 8, Problem 8.13E

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X8.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The amount of income assigned to non-controlling interest if net income of S company is $20000.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X9.

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Answer 3

Question

Chapter 8, Problem 8.13E

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X8.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The amount of income assigned to non-controlling interest if net income of S company is $20000.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X9.

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Answer 4

Question

Chapter 8, Problem 8.13E

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X8.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The amount of income assigned to non-controlling interest if net income of S company is $20000.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X9.

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Answer 5

Chapter 8, Problem 8.13E

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X8.

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The amount of income assigned to non-controlling interest if net income of S company is $20000.

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X9.

Answer 6

Chapter 8, Problem 8.13E

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X8.

Answer 7

Chapter 8, Problem 8.13E

a.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X8.

Answer 8

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The amount of income assigned to non-controlling interest if net income of S company is $20000.

Answer 9

b.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The amount of income assigned to non-controlling interest if net income of S company is $20000.

Answer 10

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X9.

Answer 11

c.

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company

Loss or gain on bond retirement: When a company buyback its bonds for certain purpose, then it is called bond retirement. Loss or gain in bond retirement is difference between the carrying amount of both the companies i.e. issuing company and purchasing company.

The journal entries needed to remove the effect of intercompany bond transactions for 20X9.

Answer 12

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Answer 13

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Answer 15

Ch. 8 - Prob. 8.1Q Ch. 8 - What is meant by a constructive bond retirement in...Ch. 8 - Prob. 8.3Q Ch. 8 - Prob. 8.4Q Ch. 8 - When a parent company sells land to a subsidiary...Ch. 8 - Prob. 8.7Q Ch. 8 - Prob. 8.8Q Ch. 8 - Prob. 8.9Q Ch. 8 - Prob. 8.10Q Ch. 8 - Prob. 8.11Q

Solution Summary: The author explains that consolidation is the process of combining financial results of various subsidiaries with the financial result of parent company. When a company buys back its bonds, it is called bond retirement.

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