Reference no: EM133005865
Question - P owns S. It is a non-wholly owned subsidiary. The 2020 income statements of both companies are shown below. The fiscal year end is December 31.
P S
Revenues $80,000 $60,000
Miscellaneous Expenses $20,000 $20,000
Depreciation Expense $30,000 $15,000
Income Before Tax $30,000 $ 25,000
On June 1, 2020, S sold equipment to P at a profit of $15,000 (before tax).
1. Assuming a 30% tax rate, and P owns 55% of S, Prepare a Consolidated Income Statement for the 2020. Be sure to identify the share of Consolidated Net income attributable to the non-controlling interest.
Parent owns 100% of Sub. As of January 1, 2020, Sub had outstanding par value bonds in the amount of $1,000,000. Annual interest on these bonds was in the amount of7%. There was a bond discount associated with this issuing where the unamortized balance as of January 1, 2020 was $40,000. These bonds will mature on January 1, 2030.
On January 1, 2020 Parent acquired 30% of these outstanding bonds at their par value (i.e. $300,000).
2. What would be the amount of Bonds Payable that would appear on the consolidated balance sheet as of December 31, 2020?
3. What is the amount of consolidated bond interest expense that would appear on the consolidate Income Statement as of December 31, 2020?
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