Cardinal Company is an 80%-owned subsidiary of Dove Corporation. Cardinal Company issued $100,000 of 8%, 10-year bonds for $96,000 on January 1, 2011. Annual interest is paid on January 1. Dove Corporation purchased the bonds on January 1, 2015, for $101,500. Both companies use the straight-line method to amortize the premium/discount on the bonds.
1. Prepare the eliminations and adjustments that would be made on the December 31, 2015, consolidated worksheet as a result of this purchase.
2. Prepare the eliminations and adjustments that would be made on the December 31, 2016, consolidated worksheet.