Dundee Company issued $ 1 , 0 0 0 , 0 0 0 face ( i .
Question:
Dundee Company issued $ face ie par value year bonds at on January X which Mega Corporation purchased. The coupon rate on the bonds is percent. Interest payments are made semiannually on July and January On July X Perth Company purchased $ face value of the bonds from Mega for $ Perth owns of Dundee's voting common stock shares.
a What amount of gain or loss on the constructive retirement of bonds will be reported in Dundee's or Perths own separate income statement for X Why or why not?
bWill a gain or loss on the constructive retirement of bonds be reported in the X consolidated financial statements If so what amount of constructive retirement gain or loss will be reported on the constructive retirement? Show your computations in good form.
c How much will Perth's purchase of the bonds affect including the effects of constructive retirement and any reversal due to elimination of interest incomeexpense consolidated net income for X Show your computations in good form
d Prepare the worksheet consolidation entries two entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements at December X
e Prepare the worksheet consolidation entries two entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements at December X
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill