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  3. parent owns 75% of sub. on the open market parent

Parent owns 75% of Sub. On the open market parent buy all bonds of the...

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Accounting

Parent owns 75% of Sub. On the open market parent buy all bonds of the Sub for $900,000. The par value of these bonds on ledger for Sub is $800,000. Interest is paid annually at 7%. On the books of the Sub there is an unamortized discount of $60,000. The tax rate is 35% . What would be the pre-tax gain or loss to the consolidated entity on the intercompany sale of the bonds? (3 marks)

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