Consolidation adjustment necessary when affiliate's debt is acquired from non-affiliateAssume that a Parent company owns 65 percent of its Subsidiary. The parent company uses the equity method to account for its Equity investment. On January 1, 2015, the Parent(face) 10 year, 10 percent bonds payable for a $100,000 premium. The bonds pay interest on December 31 of each year. On January 1, 2018,amortization. In preparing the consolidated financial statements for the year ended December 31, 2019, what consolidating entry adjustment is necessarytheSubsidiary$0+Please answer all parts of the question.$2,000,000use straight-linecompany issued to an unaffiliated companyacquired 30 percent of the bonds for $572,000. Both companiesfor the beginning-of-year Equity investment balance?

Equity investment balance represents the shareholders' stake in the company, identified on a…

Answered: ent company issued to an unaft of the…

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Accounting

ent company issued to an unaft of the bonds for $572,000. Bot year Equity investment balance

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 2E

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Consolidation adjustment necessary when affiliate's debt is acquired from non-affiliate Assume that a Parent company owns 65 percent of its Subsidiary. The parent company uses the equity method to account for its Equity investment. On January 1, 2015, the Parent company issued to an unaffiliated company $2,000,000 (face) 10 year, 10 percent bonds payable for a $100,000 premium. The bonds pay interest on December 31 of each year. On January 1, 2018, the Subsidiary acquired 30 percent of the bonds for $572,000. Both companies use straight-line amortization. In preparing the consolidated financial statements for the year ended December 31, 2019, what consolidating entry adjustment is necessary for the beginning-of-year Equity investment balance? $Answer Answer Credit
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