Several years ago Abrams, Inc., sold $800,000 in bonds to the public. Annual cash interest of 8

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Several years ago Abrams, Inc., sold $800,000 in bonds to the public. Annual cash interest of 8 percent ($64,000) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2012, Bierman Corporation (a wholly owned subsidiary of Abrams) purchased $100,000 of these bonds on the open market for $121,655, a price based on an effective interest rate of 6 percent. The bond liability had a book value on that date of $668,778. Assume Abrams uses the equity method to account internally for its investment in Bierman. What consolidation entry would be required for these bonds on
a. December 31, 2012?
b. December 31, 2014?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Fundamentals of Advanced Accounting

ISBN: 978-0077667061

5th edition

Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik

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