Bliss Perfume Company issued $300,000 of 10 percent bonds on January 1, 20X2, at 110. The bonds mature 10 years from issue and have semiannual interest payments on January 1 and July 1. Parsons Corporation owns 80 percent of Bliss Perfume stock. On April 1, 20X4, Parsons purchased $100,000 par value of Bliss Perfume bonds in the securities markets.
Partial trial balances for the two companies on December 31, 20X4, are as follows:

a. What was the purchase price of the Bliss Perfume bonds to Parsons?
b. What amount of gain or loss on bond retirement should be reported in the consolidated income statement for 20X4?
c. Prepare the necessary worksheet elimination entries as of December 31, 20X4, to remove the effects of the intercorporate bond ownership assuming Parsons uses the fully adjusted equitymethod.

  • CreatedMay 23, 2014
  • Files Included
Post your question