Questioncairns owns 75 of the voting stock of hamilton inc

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Reference no: EM13348353

Question:

Cairns owns 75 % of the voting stock of Hamilton, Inc. The parent's interest was acquired quite a few years ago on the date that the subsidiary was formed. Therefore, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.

On January 1, 2010, Hamilton sold $2,000,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8 % payable every December 31. Cairns acquired 40 percent of these bonds at 92 % of face value on January 1, 2012. Both companies use the straight-line method of amortization.

Compute the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the given dates.

December 31, 2012.

Event General Journal Debit Credit

Entry B

December 31, 2013.

Event General Journal Debit Credit

Entry *B

December 31, 2014.

Event General Journal Debit Credit

Entry *B

Reference no: EM13348353

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