Bennett Corporation owns 60 percent of the stock of Stone Container Company, which it acquired at book

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Bennett Corporation owns 60 percent of the stock of Stone Container Company, which it acquired at book value in 20X1. At that date, the fair value of the noncontrolling interest was equal to 40 percent of Stone's book value. On December 31, 20X3, Bennett purchased $100,000 par value bonds of Stone for $107,000. Stone originally issued the 10-year bonds at par value on January 1, 20X1. The bonds' coupon rate is 9 percent. Interest is paid semiannually on June 30 and December 31. Trial balances for the two companies on December 31, 20X4, are as follows:


Bennett Corporation owns 60 percent of the stock of Stone


All interest income recognized by Bennett is related to its investment in Stone bonds.

Required
a. Prepare a consolidation worksheet for 20X4 in good form.
b. Prepare a consolidated balance sheet, income statement, and retained earnings statement for20X4.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
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Advanced Financial Accounting

ISBN: 978-0078025624

10th edition

Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker

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