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What is the interest income that must be eliminated

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Question - Sun Corporation acquired 80 percent of Moon Company's voting shares on January 1, 20X8, at underlying book value. On Dec. 31, 20X8, it also purchased $1,000,000 par value 8 percent Moon bonds, which had been issued on January 1, 20X5 to Mars Corporation (unaffiliated with either Sun or Moon) at a $90,000 premium. The bonds were originally issued with a 12-year maturity and pay interest annually on December 31. During preparation of the consolidated financial statements for December 31, 20X8, the During preparation of the consolidated financial statements for December 31, 20X8, the following consolidating entry was included in the consolidation worksheet:

Bonds Payable 1,000,000

Bond Premium 67,538

Loss on Bond Retirement 33,750

Investment in Moon Company Bonds 1,101,288

A. Based on the information given above, what price did Sun pay to purchase the Moon bonds?

-$1,101,288

-$1,067,538

-$1,033,750

-$1,000,000

B. Based on the information given above, what is the interest income that must be eliminated in preparing the 20X9 consolidated financial statements?

-$1,101,288

-$1,067,538

-$1,033,750

-$1,000,000

C. Based on the information given above, what is the interest income that must be eliminated in preparing the 20X9 consolidated financial statements?

-$33,788

-$55,914

-$67,538

-$69,888

Reference no: EM132969757

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