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
ADV.FIN.ACCT. CONNECT+PROCTORIO PLUS
- Get correct answer this accounting questionarrow_forwardA company issues 30,000 shares of $8 par value common stock at $12 per share. As a result of this transaction, how much does the Paid- in Capital increase by? A. $120,000 B. $240,000 C. $90,000 D. $30,000arrow_forwardSolve this questionsarrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningPrinciples 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



