Pass corporation owns 80 of sindy company purchased at the

Reference no: EM13570619

Pass Corporation owns 80% of Sindy Company, purchased at the underlying book value on January 1, 2010. On January 1, 2010, Pass also purchased $200,000 par value 6% bonds that had been issued by Sindy on January 1, 2007 with a ten-year maturity (due January 1, 2017). Annual interest is paid on December 31. Straight-line amortization is used by both companies.

At year-end 2010, the following entry was made on the consolidating worksheet.

Bonds Payable $200,000

Bond Premium 12,000

Loss on Bond Retirement 7,000

Interest Income (a)

Investment in Sindy Bonds $218,000

Interest Expense (b)

REQUIRED:

How much did Pass pay for the bonds?
What is the book value of the bonds on the date of purchase?
What amount of interest income and interest expense must be eliminated in the entry above designated as (a) and (b)

Reference no: EM13570619

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