7) Parent purchase of Subsidiary Outstanding Bonds: Parent Corporation owns 90% the voting stock of...
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Accounting
7) Parent purchase of Subsidiary Outstanding Bonds:
Parent Corporation owns 90% the voting stock of Sub Corporation. On January 1, 2010, Parent paid $385,000 cash for $400,000 par of Sub's 10% $1,000,000 par value outstanding bonds, due on April 1, 2015. Sub's bonds had a book value of $1,020,000 on January 1, 2010. Straight-line amortization is used. What is the amount of the gain or loss on the constructive retirement of $400,000 of Sub bonds on January 1, 2010 that will be reported in the 2010 consolidated income statement?
Use the grid below for your computations:
| % of bonds purchased |
|
| Book Value of Bonds purchased |
|
| Price paid for Bonds purchased |
|
| Gain/(Loss) |
|
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