Parent owrn 100% af Sub. On the open market parent bought all bonds of the Sub for $a00,000 on January 1, 2020. The fiscal year end for both Parent and Sub is December 31. Tihe par valueof these bonds on kedger for Sub is SHOO.D00. Interest is paid annually on December 31, at 5%. On the books af the Sub there is an un-amartized discount of $60,000. The bonds mature in 5yearsWhat would be the pre-tax gain or loss to the consolidated entity on the intercompany retirement of the bonds?What amount of interest expense would need to be eliminated on the consolidated income statement?What amount of interest revenue would need to be eliminated on the consolidated income statement?

In this question ,we ae given with Interest Expense = 40,000Interest Revenue =…

Parent own 100% of Sub. On the open market parent bought all bonds of the Sub for Sa0o,000 on Jamuary 1, 2020. The fscal year end for both Parent and Sub is December 31. Tve par value of these bonds on kedger for Sub is SBO0.o00. Interest is paid annually on December 31, at 5%. On the books of the Sub there is an un amortized discount of S0.000. The bonds mature in 5 vears What would be the pre-tax gain or loss to the consolidated entity on the intercompany retirement of the bonds? What amount of interest expense would need to be eliminated on the consolidated income statement? What amount of interest revenue would need to be eliminated on the consolidated income statement?

Parent own 100% of Sub. On the open market parent bought all bonds of the Sub for Sa0o,000 on Jamuary 1, 2020. The fscal year end for both Parent and Sub is December 31. Tve par value of these bonds on kedger for Sub is SBO0.o00. Interest is paid annually on December 31, at 5%. On the books of the Sub there is an un amortized discount of S0.000. The bonds mature in 5 vears What would be the pre-tax gain or loss to the consolidated entity on the intercompany retirement of the bonds? What amount of interest expense would need to be eliminated on the consolidated income statement? What amount of interest revenue would need to be eliminated on the consolidated income statement?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 7MCQ

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