Intercompany sale of bonds: when a company sells bonds to its subsidiary, all effects of the intercompany indebtedness must be eliminated. A company cannot report an investment in its own bonds to itself. Thus when the consolidated entity is viewed as a single company, all amounts associated with intercompany indebtedness must be eliminated, including investment in bonds, the bonds payable any unamortized discount or premium, the interest income or expenses on the bonds and any accrued interest receivable or payable.
Retirement of bonds: when a constrictive retirement occurs, the consolidated income statement for the period reports a gain or loss on retirement, but not reported in consolidated
The consolidation entries to remove the effects of intercompany bond ownership in preparing consolidated financial statements.
b
Intercompany sale of bonds: when a company sells bonds to its subsidiary, all effects of the intercompany indebtedness must be eliminated. A company cannot report an investment in its own bonds to itself. Thus when the consolidated entity is viewed as a single company, all amounts associated with intercompany indebtedness must be eliminated, including investment in bonds, the bonds payable any unamortized discount or premium, the interest income or expenses on the bonds and any accrued interest receivable or payable.
Retirement of bonds: when a constrictive retirement occurs, the consolidated income statement for the period reports a gain or loss on retirement, but 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 required to be prepared in consolidated financial statement.
The consolidation entries to remove the effects of intercompany bond ownership in preparing consolidated financial statements in the next year 20X6.
Want to see the full answer?
Check out a sample textbook solution
Chapter 8 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- complete the following ttable attached - the main items listed should be , Balance , service cost , interest expense , interest revenue , contributions , benefits , asset loss/gain , liability loss / gain , Journal entry , accumulated OCI , then ending balance . The info for the question is - FlagStaff Ltd has a defined benefit pension plan for its employees. The company is considering introducing a defined benefit contribution plan, which will be available to all incoming staff. Although the defined benefit plan is now closed to new staff, the fund is active for all employees who have tenure with the company. In 2020, the following actuarial report was received for the defined benefit plan: 2020/$ Present value of the defined benefit obligation 31 December 2019 18 000 000 Past Service Cost 4 000 000 Net interest ? Current service cost 600 000 Benefits paid 2 000 000 Actuarial gain/loss on DBO ? Present value of the defined benefit obligation 31 December 2020 21 000 000…arrow_forwardA business manufactures a product with variable costs of $3.20 per unit. The product is sold for $6.40 per unit. The business has fixed costs of $4,500 and aims for a profit of $12,500. The sales level in units required to achieve the desired profit is _ units.arrow_forwardWilcox Vehicle Inspections specializes in inspecting commercial trucks that have been returned to leasing companies at the end of their contracts. Wilcox's charge per inspection is $75, and its average cost per inspection is $20. The owner wants to expand the business by hiring another employee and acquiring additional inspection equipment. The fixed costs for the new employee and equipment would be $4,500 per month. Required: How many inspections per month would the new employee have to perform to earn a profit of $2,000? Helparrow_forward
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning