Use the following information to answer the question(s) below.
Pascalian Company owns a 90% interest in Sapp Company.On January 1,2010,Pascalian had $300,000,6% bonds outstanding with an unamortized premium of $9,000.The bonds mature on December 31,2014.Sapp acquired one-third of Pascalian's bonds in the open market for $97,000 on January 1,2010.Both companies use straight-line amortization of bond discounts/premiums.Interest is paid on December 31.On December 31,2010,the books of the two affiliates held the following balances:
-The gain from the bond purchase that appeared on the December 31,2010 consolidated income statement was
Definitions:
Labor Intensive
Describes production processes or industries that require a large amount of labor relative to capital to produce goods or services.
Fixed Asset Investments
Long-term investments in tangible assets such as property, plant, and equipment, intended for use in operations.
Trade-In Allowance
The value subtracted from the price of a new item when an old item is given as part of the deal.
Book Value
The net value of an asset or company calculated by total assets minus intangible assets (patents, goodwill) and liabilities.
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