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Pesto Company possesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial...

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Accounting

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Pesto Company possesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value method to account for this investment On January 1, 2017, Pesto sold 9 percent bonds payable with a $8.0 million face value (maturing in 20 years) on the open market at a premium of $1,020,000. On January 1, 2020, Salerno acquired 40 percent of these same bonds from an outside party at 96.6 percent of face value. Both companies use the straight-ine method of amortization. For a 2021 consolidation, what adjustment should be made to Pesto's beginning Retained Earnings as a result of this bond acquisition? Multiple Choice $439,000 increase 5455,600 increase CARS Multiple Choice $439,000 increase $455,600 increase $449,200 increase $428,800 increase

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