The Planes Company Owns 100% of the Outstanding Common Stock

question 38

Essay

The Planes Company owns 100% of the outstanding common stock of the Sands Company. Sands issued $100,000 of face value, 9%, 10-year bonds on January 1, 20X3, for $96,000. The discount is being amortized on a straight-line basis. On January 1, 20X8, Planes purchased all the bonds as an investment for $95,000.
Required:
Be specific in answering the following questions and include numerical explanations.
a.How will this bond issue be recorded and accounted for in 20X8 on the separate books of Planes and Sands?
b.How will this bond issue be accounted for on the 20X8 consolidated statements?
c.How will this bond issue be recorded and accounted for in 20X9 on the separate books of Planes and Sands?
d.How will this bond issue be accounted for on the 20X9 consolidated statements?

Grasp the concept of opportunity recognition and risk-taking in entrepreneurship.

Understand the economic and social contributions of small and medium-sized enterprises (SMEs) and necessity-based entrepreneurship.

Acknowledge the distinct backgrounds and experiences that lead individuals to pursue entrepreneurship.

Recognize the diversity in entrepreneurial ventures and their impact.

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Definitions:

AC Sinewave

Represents alternating current electricity in a waveform that alternates in a sinusoidal manner, typical of household electrical supply.

Ion

An atom with either an excess or a deficiency of electrons in the valence; a negatively or positively charged particle.

Surplus of Electrons

A condition where there are more electrons than protons in a system, leading to a negative charge.

Ohmmeter

An instrument for measuring electrical resistance in ohms, used in diagnosing and troubleshooting electrical problems.