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Doone acquired 80 percent of Akrons outstanding shares on January 1, 2013, in exchange for...

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Accounting

Doone acquired 80 percent of Akrons outstanding shares on January 1, 2013, in exchange for $369,000 in cash. The subsidiarys stockholders equity accounts totaled $353,000 and the noncontrolling interest had a fair value of $92,250 (Total FV of Small) on that day. However, a building (with a ten-year remaining life) in Akrons accounting records was undervalued by $19,000. Doone assigned the rest of the excess fair value over book value to Akrons patented technology (five-year remaining life).

. On January1, 2014, Doone acquired on the open market bonds for $10,800 originally issued by Akron. This investment had an effective rate of 8%. The bonds had a face value of $10,000 and a cash interest rate of 9%. At the date of acquisition, these bonds were shown as liabilities by Akron with a book value of $8,400 (based on an effective rate of 11%). Prepare the necessary consolidation entries for these bonds on December 31, 2014 and December 31, 2015. You have to include the Akrons bond issue amortization schedule, Doone and Akrons individual financial records, side by side comparison of effects of intra-entity debt transaction, and consolidation entry for each year (Question6)

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