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

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Chapter 8 Solutions
ADVANCED FINANCIAL ACCT.(LL) >CUSTOM<
- Havenwood Industries provides the following information for the year: Description Sales Revenue Amount $400,000 Accounts Receivable $300,000 Ending Inventory $250,000 Cost of Goods Sold $220,000 Sales Returns $60,000 Sales Discounts $30,000 What is Havenwood Industries' gross profit? a. $210.000 b. $90,000 c. $120,000 d. $150,000arrow_forwardCompute the predetermined overhead ratearrow_forwardWhat is the amount of interest revenue?arrow_forward
- The machine was purchased on January 1st of the current year and has been in service for one complete year.arrow_forwardPlease provide answer the following requirements on these financial accounting questionarrow_forwardThe highest value of total cost was $940,000 in August for Honda Foods Ltd. Its lowest value of total cost was $700,000 in February. The company produces onlyone product. The production volumes in August and February were 20,000 and 14,000 units, respectively. What is the fixed cost per month?arrow_forward
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