Question: On January 1 2014 Dunbar Corporation an 85 owned subsidiary of
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.
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