Chapter 8, Problem 8.18P

To determine

Retirement of bonds: when a constrictive retirement occurs, the consolidated income statement for the period reports a gain or loss on retirement, but it is not reported in consolidated balance sheet. If the company purchases the bond of an affiliate from an unrelated party at a price equal to the liability reported, the elimination entries are required to be prepared in consolidated financial statement.

The journal entry made by P in 20X6 to record its interest income on BW bonds that it holds.

To determine

Retirement of bonds:when a constrictive retirement occurs, the consolidated income statement for the period reports a gain or loss on retirement, but it is not reported in consolidated balance sheet. If the company purchases the bond of an affiliate from an unrelated party at a price equal to the liability reported, the elimination entries are required to be prepared in consolidated financial statement.

Elimination entry for interoperate bond ownership for consolidation worksheet for the year December 31 20X5.

b

To determine

Retirement of bonds:when a constrictive retirement occurs, the consolidated income statement for the period reports a gain or loss on retirement, but it is not reported in consolidated balance sheet. If the company purchases the bond of an affiliate from an unrelated party at a price equal to the liability reported, the elimination entries are required to be prepared in consolidated financial statement.

The amount on consolidated net income and income to controlling interest to be reported in income statement for 20X5 and 20X6.