Question: Investor Company purchased 70 of the 500 000 par value outstanding

Investor Company purchased 70% of the $500,000 par value outstanding bonds of Investee Company, a 70% owned subsidiary. The bonds cost $338,000 and had a carrying value of $360,000 on the date of purchase.
a. What portion of the gain or loss resulting from the constructive bond retirement should be allocated to Investor Company?
b. What portion of the constructive gain or loss should be allocated to Investee Company?

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  • CreatedMarch 13, 2015
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