Par Inc owns 76.69% of Sub Corp. On January 1, Year 3, Sub purchased $139,636 face value
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Question:
Par Inc owns 76.69% of Sub Corp. On January 1, Year 3, Sub purchased $139,636 face value of Par's 10.71% bonds for $115,996. On that date, Par's total bond liability consisted of $279,272 face-value bonds with an unamortized bond discount of $23,292. Interest payments are June 30 and December 31 each year. Straight-line method is used for bond amortization. Both companies have a Dec 31 year end. What would be the pre-tax gain or loss to the combined entity on the intercompany sale of the bonds?
a. $12,294
b. $11,694
c. $12,594
d. $11,394
e. $11,994
Expert Answer:
Correct answer d 11994 Explanation of bonds in intercompany holdings 139636 279272 05 or 50 Co... View the full answer
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