
a
Introduction: When an affiliate of the issuer later acquires bonds from an 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 the debtor. The acquisition of an affiliate’s bonds by another company within affiliated entities is referred to as constructive retirement. Although bonds are not actually retired.
When constructive retirement occurs the consolidated income statement reports gain or loss based on the difference between carrying value and purchase price paid by the affiliate to acquire it. And it is not reported in the consolidated
The preparation of consolidation worksheet for 20X4
b
Introduction: When an affiliate of the issuer later acquires bonds from an 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 the debtor. The acquisition of an affiliate’s bonds by another company within affiliated entities is referred to as constructive retirement. Although bonds are not actually retired.
When constructive retirement occurs the consolidated income statement reports gain or loss based on the difference between carrying value and purchase price paid by the affiliate to acquire it. And it is not reported in the consolidated balance sheet either as bond payable or as an investment because the bonds are no longer outstanding.
The preparation of consolidation worksheet for 20X4

Want to see the full answer?
Check out a sample textbook solution
Chapter 8 Solutions
ADVANCED FINANCIAL ACCT.(LL) >CUSTOM<
- Can you explain the correct methodology to solve this general accounting problem?arrow_forwardI need help solving this financial accounting question with the proper methodology.arrow_forwardPlease provide the correct answer to this general accounting problem using accurate calculations.arrow_forward
- I need help with this financial accounting problem using accurate calculation methods.arrow_forwardPlease explain the solution to this general accounting problem with accurate principles.arrow_forwardPlease provide the answer to this general accounting question using the right approach.arrow_forward
- Can you provide the valid approach to solving this financial accounting question with suitable standards?arrow_forwardDavis Industries' manufacturing overhead includes $8.20 per machine hour for variable manufacturing overhead and $186,000 per period for fixed manufacturing overhead. What is the predetermined overhead rate for the denominator level of activity of 5,200 machine hours?arrow_forwardCan you solve this general accounting problem with appropriate steps and explanations?arrow_forward
- I need help with this general accounting question using standard accounting techniques.arrow_forwardI am trying to find the accurate solution to this general accounting problem with the correct explanation.arrow_forwardPlease explain the solution to this general accounting problem with accurate explanations.arrow_forward
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning


