Crane Company issued a 10 year, 7% bonds in the amount of $1,000,000 on January 1, 2016. Crane Company is an 80%-owned subsidiary of Mitchell Company. The bonds were issued at face value, and interest is payable each January 1. On January 1, 2018, Mitchell Company purchased all of the Darcy bonds for $900,000. Mitchell will amortized the discount on a straight-line basis. For the years ending (a) December 2018, and (b) December 31, 2019, determine the effects of this transaction:

A. On consolidated net income.

B. On the distribution of income to the controlling and non-controlling interests.

Answer rating: 100% (QA)

Solution Consolidated net income willI be increased by 12500 in 2018 and 2019 which is a part of amo... View the full answer