Reference no: EM133073931

Question - DaVinci Inc. owns 75% of the common shares of Rembrandt Corp. On January 1, 2017, DaVinci issued bonds with a par value of $350,000 which will mature on January 1, 2022. The bonds bear interest at an annual rate of 8%, with annual interest payments made each December 31st.

At the date of issue of the bonds, DaVinci received proceeds of $360,000.

On January 1, 2019, Rembrandt purchased 40% of DaVinci's bonds on the open market for $134,000.   Both companies use the effective interest method.  Both companies have a December 31st year- end and pay income taxes at a rate of 40%.  Bond gains and losses are to be allocated to each company.   During 2019, Rembrandt earned a net income of $80,000 and paid dividends of $20,000.

Market rates (Yield) for these bonds was 7.39% at issue date January 1, 2017 for DaVinci.

Market rate (Yield) for Rembrandt at investment date January 1, 2019 was 9.33%.

Required - What is the carrying amount of the bonds?