Fargus Corporation Owned 51% of the Voting Common Stock of Sanatee

question 113

Essay

Fargus Corporation owned 51% 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 $1,400,000 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 January 1, 2022, for 95% of the face value. Both companies utilized the straight-line method of amortization.What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2023?

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Definitions:

Sour Pickles

A type of food preserved in a solution of vinegar or brine, characterized by its sour taste.

Salivation

The secretion and release of saliva into the mouth, which is often triggered by the sight, smell, or thought of food.

Conditioned Stimulus

An initially neutral trigger that, upon being paired with an unconditioned stimulus, in time elicits a conditioned response.

Novel Stimulus

A new or unfamiliar stimulus that has not been previously experienced by an organism, which can attract attention and elicit responses.