Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2017, Hamilton sold $1,700,000 in 10-year bonds to the public at 105. The bonds had a cash interest rat of 10 percent payable every December 31. Cairns acquired 35 percent of these bonds at 96 percent of face value on January 1, 2019. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. December 31, 2019 b. December 31, 2020 c. December 31, 2021

Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2017, Hamilton sold $1,700,000 in 10-year bonds to the public at 105. The bonds had a cash interest rat of 10 percent payable every December 31. Cairns acquired 35 percent of these bonds at 96 percent of face value on January 1, 2019. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. December 31, 2019 b. December 31, 2020 c. December 31, 2021

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2017, Hamilton sold $1,900,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 45 percent of these bonds at 92 percent of face value on January 1, 2019. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) December 31, 2019 December 31, 2020 December 31, 2021
Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2017, Hamilton sold $1,200,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 40 percent of these bonds at 92 percent of face value on January 1, 2019. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) December 31, 2019 December 31, 2020 December 31, 2021 Prepare Consolidation Entry B…
Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.On January 1, 2014, Hamilton sold $1,000,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2016. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates.a. December 31, 2016b. December 31, 2017c. December 31, 2018 How do you calculate the interest income and interest expense?
Accounting Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2017, Hamilton sold $1,000,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2019. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) December 31, 2019 December 31, 2020 December 31, 2021
Cairns owns 75 percent of the voting stock of Hamilton, Incorporated. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2020, Hamilton sold $2,000,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 40 percent of these bonds at 92 percent of face value on January 1, 2022. Both companies utilize the straight-line method of amortization. Required: Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. December 31, 2022 December 31, 2023 December 31, 2024
Highlight, Inc., owns all outstanding stock of Kiort Corporation. The two companies report the following balances for the year ending December 31, 2017:On January 1, 2017, Highlight acquired on the open market bonds for $108,000 originally issued by Kiort. This investment had an effective rate of 8 percent. The bonds had a face value of $100,000 and a cash interest rate of 9 percent. At the date of acquisition, these bonds were shown as liabilities by Kiort with a carrying amount of $84,000 (based on an effective rate of 11 percent). Determine the balances that should appear on a consolidated income statement for 2017.
argus Corporation owned 61% of the voting common stock of Sanatee, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition price.On January 1, 2020, Sanatee sold $1,800,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on April 1, 2022, for 95% of the face value. Both companies utilized the straight-line method of amortization. a. Prepare amortization tables for Fargus (4/1/2022 to 12/31/2023) and Sanatee (1/1/2020 to 12/31/2023) b. Determine whether this is gain/loss on retirement of bond on April 1 2022 c. Determine the consolidated interest expense on Dec 31 2022 d. If Fargus has net income $200,000 and Sanatee has net income $50,000 in 2022, how much is the consolidated net income? e. What consolidation entry would be recorded in connection…
Powell Company owns an 80% interest in Sauter, Inc. On January 1, 2011, Sauter issued $400,000 of 10-year, 12% bonds at a premium of $50,000. On December 31, 2015, 5 years after original issuance, Powell purchased all of the outstanding bonds for $390,000. Both firms use the straight-line method of amortization. What is the gain on retirement on the 2015 consolidated income statement? a. $12,500 b. $22,500 c. $10,000 d. $35,000
Munson and Sons (MS) owns 32% of Harrington Corp. During 2022, Harrington reported a net income of $395,000 and did not declare any dividends. Additionally, Harrington sold a piece of land, with a carrying value of $100,000 to MS for $400,000. MS still holds the land. MS accounts for its investment in Harrington Corp using the equity method. Required: On December 31, 2022, a journal entry is required to record the impact of the above transactions. What is the net debit to the Investment in Harrington Corp account / the net credit to the to Equity Income (these would be the same). Your Answer:
Rohan Limited is a privately owned company and has 31 December year-end. The company elected to apply ASPE for its financial reporting. On January 1, 2017, Rohan Limited purchased 30 shares of the 100 outstanding common shares of another privately held company, Bassett Company, for $165,000 cash. Rohan Limited has significant influence as a result of this acquisition. At that date, the statement of financial position of Bassett Company reflected the following: Non-depreciable assets $155,400 (fair value, $199,000); Depreciable assets (net), $178,000 (fair value, $250,000); and Total liabilities, $101,900 (book value equaled fair value); The depreciable assets had remaining useful life of 5 years and had been depreciated using straight-line method. On December 31, 2017, Bassett Company reported net income of $88,400. Bassett Company also declared and paid cash dividend in the amount of $20,000 on December 31, 2017. Goodwill was not impaired over the time period in question. Required:…
Simmons Corporation owns stock of Armstrong, Inc. Prior to 2017, the investment was accounted for using the equity method. In early 2017, Simmons sold part of its investment in Armstrong, and began using the fair value method. In 2017, Armstrong earned net income of $80,000 and paid dividends of $95,000. Prepare Simmons’s entries related to Armstrong’snet income and dividends, assuming Simmons now owns 10% of Armstrong’s stock.
ABC owns 29% of XYZ Corp. During 2020, XYZ reported a net income of $415,000 and did not declare any dividends. Additionally, XYZ sold a piece of land, with a carrying value of $140,000 to ABC for $345,000. ABC still holds the land. ABC accounts for its investment in XYZ Corp using the equity method. Required: On December 31, 2022, a journal entry is required to record the impact of the above transactions. What is the net debit to the Investment in XYZ Corp account / the net credit to the Equity Income.