Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds form unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired. When constructive retirement occurs the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding. To explain : what will be the effect on consolidated net income and income to the non-controlling interest, when a subsidiary purchases the bonds of its parent from a non-affiliate in preceding period and a gain on retirement was reported.

Question

Want to see the full answer?

Answer 1

Question

Chapter 8, Problem 8.15Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds form unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : what will be the effect on consolidated net income and income to the non-controlling interest, when a subsidiary purchases the bonds of its parent from a non-affiliate in preceding period and a gain on retirement was reported.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Please provide the accurate answer to this financial accounting problem using valid techniques.

Sales commissions are $6,000 when 1,500 units are sold and $12,000 when 3,000 units are sold. Using the high-low method, what is the variable portion of sales salaries and commissions?

Can you show me the correct approach to solve this financial accounting problem using suitable standards?

Answer 2

Question

Chapter 8, Problem 8.15Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds form unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : what will be the effect on consolidated net income and income to the non-controlling interest, when a subsidiary purchases the bonds of its parent from a non-affiliate in preceding period and a gain on retirement was reported.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 8, Problem 8.15Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds form unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : what will be the effect on consolidated net income and income to the non-controlling interest, when a subsidiary purchases the bonds of its parent from a non-affiliate in preceding period and a gain on retirement was reported.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 8, Problem 8.15Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds form unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : what will be the effect on consolidated net income and income to the non-controlling interest, when a subsidiary purchases the bonds of its parent from a non-affiliate in preceding period and a gain on retirement was reported.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 8, Problem 8.15Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds form unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : what will be the effect on consolidated net income and income to the non-controlling interest, when a subsidiary purchases the bonds of its parent from a non-affiliate in preceding period and a gain on retirement was reported.

Answer 6

Chapter 8, Problem 8.15Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds form unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : what will be the effect on consolidated net income and income to the non-controlling interest, when a subsidiary purchases the bonds of its parent from a non-affiliate in preceding period and a gain on retirement was reported.

Answer 7

Chapter 8, Problem 8.15Q

To determine

Bonds of affiliate purchased from non-affiliate: When an affiliate of issuer later acquires bonds form unrelated party, the bonds are retired at the time of purchase. The bonds are not held outside the consolidated entity once another company within the consolidated entity purchases them, it must be treated as repurchase by debtor. Acquisition of an affiliate’s bonds by another company with in affiliated entities is referred as constructive retirement. Although bonds are not actually retired.

When constructive retirement occurs the consolidated income statement reports gain or loss based on difference between carrying value and purchase price paid by affiliate to acquire it. And it is not reported in consolidated balance sheet either as bond payable or as investment because the bonds are no longer outstanding.

To explain : what will be the effect on consolidated net income and income to the non-controlling interest, when a subsidiary purchases the bonds of its parent from a non-affiliate in preceding period and a gain on retirement was reported.

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

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 when an affiliate acquires bonds from a non-affiliate, the bonds are retired at the time of purchase.

Concept explainers

Videos

Want to see the full answer?

Chapter 8 Solutions