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Unformatted text preview: 8-9 NOTE: I added to this problem in order to get more out of it.BONDS:Parent=IssuerEntireIntercoBonds Payable1,000,000300,0001/1/x1 Discount30,0001/1/x8 Discount*19,5005,850Amort (30,000/20yr)1,50045012/31/x8 Discount18,0005,40012/31/x9 Discount16,5004,950Intercompany interest expense= (300,000 x 7%) +450 = 21,450*13/20x30,000=19,500 or 1,500 x 13=19,500Sub=PurchaserInvestment in Bonds300,000Discount(3,120)Net Investment296,880Amort. (3,120/13)24012/31/x8 Discount297,12012/31/x9 Discount297,360Interco. Interest Income= (300,000 x 7% + 240 =21,2401/1/8 bonds payable=300,000 - 5,850 = 294,150 compared to 296,880 = 2,730 LossInterest income = 21,240Interest expense = 21,450Difference = 210EQUITY METHOD ENTRIES x8:Investment in SXXIncome from SXXto record net income CashXXInvestment in SXXTo record dividendsELIMINATION ENTRIES x8:Income from SXXDividends DeclaredInvestment in SXXreversal Income to Non Controlling InterestXXDividends DeclaredXXNon Controlling InterestNI x 30%Interest Payable...
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- Spring '08
- Generally Accepted Accounting Principles, xx xx xx