What adjustment should be made to pestos beginning retained

Assignment Help Accounting Basics

Reference no: EM131957707

Problem

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, 2010, Pesto sold 10 percent bonds payable with a $11.0 million face value (maturing in 20 years) on the open market at a premium of $820,000. On January 1, 2013, Salerno acquired 40 percent of these same bonds from an outside party at 96.6 percent of face value. Both companies use the straightline method of amortization. For a 2014 consolidation, what adjustment should be made to Pesto's beginning Retained Earnings as a result of this bond acquisition?

Reference no: EM131957707

Questions Cloud

Describe how the male role has changed since the 1950s : The male and female roles in the family and how they have changed from the 1950s through today.

In what ways does culture related to social class impact : In what ways does culture related to social class impact identity and pride within specific social classes?

Implications of canada high immigration rate : What are the ecological implications of Canada's high immigration rate?

Leaf anatomy and biochemical pathways : Include leaf anatomy and biochemical pathways in your discussion of each type of plant.

What adjustment should be made to pestos beginning retained : For a 2014 consolidation, what adjustment should be made to Pesto's beginning Retained Earnings as a result of this bond acquisition?

Home psa testing product to market : What issues may influence the ability to take a new mens home PSA testing product to market?

Compute what is the gain recognized : Person A purchases a share of stock on 1/1/2013 for $1.00. Person A purchased another share of stock on 2/1/2013 for $2.00. What is the gain recognized?

How do permanent accounts differ from temporary accounts : How do permanent accounts differ from temporary accounts? What four different types of entries are required in closing the books?

Provide a justification for your determination : Describe the response of leaders to the situation, and based on their response, determine the leadership theory that they most likely employ.

User Account

All Pages