Opus, Incorporated, owns 80 percent of Bloom Company. On January 1, 2017. Opus acquires half of Bloom's $700,000 outstanding bonds. Opus paid $390.226 for this investment, indicating an 8 percent effective yield.

The bonds of Bloom Company had been sold on the open market on January 1, 2014, at a 12 percent effective rate. The bonds pay a cash interest rate of 10 percent every January 1and are scheduled to come due on January 1, 2025. Bloom issued this debt originally on January , 2014 for $616,872.

Assume Opus Incorporated uses the equity method to account internally for its investment in Bloom Company

Required:

a.

Complete the amortization schedule below for Opus Incorporated's share of the bonds payable for Bloom Company using the straight-line method for amortization of bond premiums or discounts (Round your answers to 2 decimal points.)

b. Complete the amortization schedule below for Opus Incorporated's Investment in the bonds of Bloom Company using the straight-line method for amortization of bond premiums or discounts. (Round your answers to 2 decimal points.)

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Bloom's Bonds Payable Amortization Schedule for Opus' Share 10% Face Date Value 1/1/14 $ 350,000 12/31/14 350,000 12/31/15 350,000 12/31/16 350.000 12/31/17 350,000 12/31/18 350,000 Unamortized Discount Unamortized Carrying Value $ Cash Interest 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 Discount Amortized Interest Expense Date 1/1/17 12/31/17 12/31/18 Opus' Investment in Bloom's Bonds Amortization Schedule Unamortized 10% Carrying Value $390,226.00 Face Value S 350,000 350.000 350.000 $ Cash Interest 35,000 35,000 Premium Amortized Interest Income Bloom's Bonds Payable Amortization Schedule for Opus' Share 10% Face Date Value 1/1/14 $ 350,000 12/31/14 350,000 12/31/15 350,000 12/31/16 350.000 12/31/17 350,000 12/31/18 350,000 Unamortized Discount Unamortized Carrying Value $ Cash Interest 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 Discount Amortized Interest Expense Date 1/1/17 12/31/17 12/31/18 Opus' Investment in Bloom's Bonds Amortization Schedule Unamortized 10% Carrying Value $390,226.00 Face Value S 350,000 350.000 350.000 $ Cash Interest 35,000 35,000 Premium Amortized Interest Income

Answer rating: 100% (QA)

Face value 350000 Original issue price6168722 308436 Discount on original issue 41564 Discount amort... View the full answer