Prepare the December consolidation entries

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Question - Breaux possesses a 70% interest in the outstanding stock of Keller. On January 1, 2013, Keller issued $1 million in 20 year bonds, paying 9% interest annually. Keller sold the debt for $940,000 to yield an effective rate of 10% per year. On January 1, 2014, Breaux purchased all of the debt on the open market for $1,057,000. This price was based on an effective rate of 8%. At January 1, 2015, the unamortized discount and book value of the debt was $50,600 and $949,400 respectively.

Required - Prepare the December 31, 2015, consolidation entries necessitated by the retirement of the debt by Keller and subsequent purchase of the debt by Breaux. The parent uses the equity method to account for the investment.

Reference no: EM132497478

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