Brook Company is an 80% owned subsidiary of Stone Corporation. Brook Company issued $150,000 of 10%, 10 year bonds for $140,000 on January 1, 20X1. Annual interest is paid on January 1 each year. Stone Corporation purchased the bonds on January 1, 20X6 for $152,000. Both companies are using the straight-line method to amortize any premium or discount on the bonds.

Requirements

a. Prepare the eliminations and adjustments that would be made on the December 31, 20X6 consolidated worksheet as a result of this purchase.
b. Prepare the eliminations and adjustments that would be made on the December 31, 20X7 consolidated worksheet as a result of this purchase.

Answer rating: 100% (QA)

Answer a On the December 31 20X6 consolidated worksheet the eliminatio... View the full answer