On January 1, 2014, Dunbar Corporation, an 85%-owned subsidiary of Garfield Industries, received $48,055 for $50,000 of 8%, 5-year bonds it issued when the market rate was 9%. When Garfield Industries purchased these bonds for $47,513 on January 2, 2016, the market rate was 10%. Given the following effective interest amortization schedules for both companies, calculate the gain or loss on retirement and the interest adjustments to the issuer’s income distribution schedules over the remaining term of the bonds.
Answer to relevant QuestionsCarlton Company is an 80%-owned subsidiary of Mirage Company. On January 1, 2011, Carlton sold $100,000 of 10-year, 7% bonds for $101,000. Interest is paid annually on January 1. The market rate for this type of bond was 9% ...Since its 100% acquisition of Dreger Corporation stock on December 31, 2012, Jayco Corporation has maintained its investment under the equity method. However, due to Dreger’s earning potential, the price included a $40,000 ...Patter Inc. acquired an 80% interest in Swing Company for $480,000 on January 1, 2011, when Swing had the following stockholders’ equity: Common stock ($10par) ............... $100,000 Additional paid-in capital in excess ...Refer to the preceding facts for Postman’s acquisition of 80% of Spartan’s common stock and the bond transactions. Postman uses the simple equity method to account for its investment in Spartan. On January 1, 2016, ...Company P has internally generated net income of $250,000 (excludes share of subsidiary income). Company P has 100,000 shares of outstanding common stock. Subsidiary Company S has a net income of $60,000 and 40,000 shares of ...
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