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What was the pre-tax gain or loss to parent on intercompany

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Reference no: EM132490466

Parent owns 75% of Sub. On the open market parent buy all bonds of the Sub for $900,000. The par value of these bonds on ledger for Sub is $750,000. Interest is paid annually at 7%. On the books of the Sub there is an unamortized discount of $50,000. The tax rate is 40%

Question a. What would be the pre-tax gain or loss to the consolidated entity on the intercompany sale of the bonds?

Question b. What was the pre-tax gain or loss to Parent on the intercompany sale of the bonds?

Reference no: EM132490466

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