Pretzel Co. owns 90% of the common shares of Salty Co. Pretzel Co. has a $100,000 bond issue outstanding that pays 10% interest annually on December 31. The bonds were originally issued at a premium, which is being amortized on a straight-line basis at the rate of $250 per year. On December 31, 20X4, the unamortized premium amounts to $1,000. The bonds mature on December 31, 20X5. On December 31, 20X4, Salty Co. purchases all of the outstanding bonds of Pretzel Co. on the open market at a cost of $98,000. 

Calculate the amount of the gain allocated to Salty Co.

Answer rating: 100% (QA)

Heres how to calculate the amount of the gain allocated to Salty Co Step 1 Calculate the carrying va... View the full answer