Question: Several years ago Absalom Inc sold 800 000 in bonds to

Several years ago Absalom, 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 2010, McDowell Corporation (a wholly owned subsidiary of Absalom) 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. What consolidation entry would be required for these bonds on
a. December 31, 2010?
b. December 31, 2012?

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  • CreatedOctober 04, 2014
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