Reference no: EM132969114
Question - Cutler Corporation owns 65 percent of Marina Corporation's voting shares. On January 1, 20X3, Cutler Corporation sold $750,000 par value 7 percent bonds to Marina when the market interest rate was 4 percent. The bonds mature in 15 years and pay interest semiannually on June 30 and December 31.
A) Based on the information given above, in the preparation of the 20X3 consolidated financial statements, premium on bonds payable will be
-debited for $239,415 in the consolidation entries.
-credited for $239,415 in the consolidation entries.
-debited for $251,960 in the consolidation entries.
-credited for $251,960 in the consolidation entries.
B) Based on the information given above, in the preparation of the 20X3 consolidated financial statements, interest income will be
-debited for $39,955 in the consolidation entries.
-credited for $39,955 in the consolidation entries.
-debited for $52,500 in the consolidation entries.
-credited for $52,500 in the consolidation entries.
C) Based on the information given above, what amount of investment in bonds will be eliminated in the preparation of the 20X3 consolidated financial statements?
-$643,120
-$750,000
-$989,415
-$1,001,960
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