Can you explain those answers?
Light Corporation owns 80 percent of Sound Company's votingshares. On January 1, 20X7, Sound sold bonds with a par value of$300,000 at 95. Light purchased two thirds of the bonds; theremainder was sold to nonaffiliates. The bonds mature in ten yearsand pay an annual interest rate of 6 percent. Interest is paidsemiannually on January 1 and July 1.
8. Based on the information given above, what amount of interestexpense should be reported in the 20X8 consolidated incomestatement?
Answer is B. $6,500
9. Based on the information given above, what amount of interestreceivable will be recorded by Light Corporation on December 31,20X8, in its separate financial statements?
Answer is D. $6,000
10. Based on the information given above, what amount ofinterest expense will be eliminated in the preparation of the 20X8consolidated financial statements?
Answer is A. $13,000
Master Corporation owns 85 percent of Servant Corporation'svoting shares. On January 1, 20X8, Master Corporation sold $200,000par value 8 percent bonds to Servant for $245,000. The bonds maturein 10 years and pay interest semiannually on January 1 and July1.
13) Based on the information given above, in the preparation ofthe 20X8 consolidated financial statements, premium on bondspayable will be
Answer is C. debited for $40,500 in the consolidatingentries
14) Based on the information given above, in the preparation ofthe 20X8 consolidated financial statements, interest income willbe
Answer is debited for $11,500 in the consolidatingentries.
15) Based on the information given above, whatamount of investment in bonds will be eliminated in the preparationof the 20X8 consolidated financial statements?
Answer is $240,500
Can you explain those answers?
Light Corporation owns 80 percent of Sound Company's votingshares. On January 1, 20X7, Sound sold bonds with a par value of$300,000 at 95. Light purchased two thirds of the bonds; theremainder was sold to nonaffiliates. The bonds mature in ten yearsand pay an annual interest rate of 6 percent. Interest is paidsemiannually on January 1 and July 1.
8. Based on the information given above, what amount of interestexpense should be reported in the 20X8 consolidated incomestatement?
Answer is B. $6,500
9. Based on the information given above, what amount of interestreceivable will be recorded by Light Corporation on December 31,20X8, in its separate financial statements?
Answer is D. $6,000
10. Based on the information given above, what amount ofinterest expense will be eliminated in the preparation of the 20X8consolidated financial statements?
Answer is A. $13,000
Master Corporation owns 85 percent of Servant Corporation'svoting shares. On January 1, 20X8, Master Corporation sold $200,000par value 8 percent bonds to Servant for $245,000. The bonds maturein 10 years and pay interest semiannually on January 1 and July1.
13) Based on the information given above, in the preparation ofthe 20X8 consolidated financial statements, premium on bondspayable will be
Answer is C. debited for $40,500 in the consolidatingentries
14) Based on the information given above, in the preparation ofthe 20X8 consolidated financial statements, interest income willbe
Answer is debited for $11,500 in the consolidatingentries.
15) Based on the information given above, whatamount of investment in bonds will be eliminated in the preparationof the 20X8 consolidated financial statements?
Answer is $240,500
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| Wood Corporation owns 70 percent of Carter Companyâs votingshares. On January 1, 20X3, Carter sold bonds with a par value of$645,000 at 98. Wood purchased $430,000 par value of the bonds; theremainder was sold to nonaffiliates. The bonds mature in five yearsand pay an annual interest rate of 8 percent. Interest is paidsemiannually on January 1 and July 1.
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