Soft Limited Owns 70% of the Shares of Hard Co

question 1

Essay

Soft Limited owns 70% of the shares of Hard Co.On January 1,20X5,Hard Co.issued $1,000,000 bonds payable at 6%,due in December 31,20X10.The bonds were issued for $907,542,representing a yield of 8%.The interest is paid annually on December 31.On January 1,20X6,Soft purchased $300,000 face value of the Hard bonds for $287,700 when the bonds were yielding 7%.
Required:
Both companies use the effective interest rate to amortize the bonds.Prepare the journal eliminating journal entries relating to the bonds as they would appear on the consolidated worksheet.The agency method is used.Calculate the consolidated bonds payable account at December 31,20X6,assuming there are no other bonds outstanding.

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Definitions:

Additive Inverse

A number that when added to a given number results in a sum of zero; essentially, the negative counterpart of a number.

Quotient

The result obtained when one quantity is divided by another.

Standard Form

A way of writing numbers using the digits 0-9, where each digit is placed in a specific location to indicate its value.

Complex Number

A number comprising a real and an imaginary part, expressed as a + bi, where a and b are real numbers, and i is the square root of -1.