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Separate Company and Consolidated Income Statements for Pitta and Sojourn

question 34

Essay

Separate company and consolidated income statements for Pitta and Sojourn Corporations for the year ended December 31,2013 are summarized as follows:
$\begin{array}{llcl}& \underline{\text { Pitta}}& \underline{\text { Souiourn}}& \underline{\text { Consolidated}}\\\text { Sales Revenue } & \$ 500,000 & \$ 100,000 & \$ 600,000 \\\text { Income from Sojoum } & 19,900 & & \\\text { Bond interest income } & & 6,000 & \\\text { Gain on bond retirement } & & & 3,000 \\\text { Total revenues } & 519,900 & 106,000 & 603,000\end{array}$ $\begin{array}{llll}\text { Cost of sales } & \$ 280,000 & \$ 50,000 & \$ 330,000 \\\text { Bond interest expense } & 9,000 & & 3,600 \\\text { Other expenses } & \underline{120,900} & \underline{31,000} & \underline{151,900} \\\text { Total expenses } & \underline{409,900} & \underline{81,000} & \underline{485,500} \\\text { Consolidated net income } & & &\underline{ 117,500}\\\text { Noncontrolling interest share } & & &\underline{7,500}\end{array}$
Separate net income and
Control.interest share in
$Separate company and consolidated income statements for Pitta and Sojourn Corporations for the year ended December 31,2013 are summarized as follows: \begin{array}{llcl} & \underline{\text { Pitta}}& \underline{\text { Souiourn}}& \underline{\text { Consolidated}}\\ \text { Sales Revenue } & \$ 500,000 & \$ 100,000 & \$ 600,000 \\ \text { Income from Sojoum } & 19,900 & & \\ \text { Bond interest income } & & 6,000 & \\ \text { Gain on bond retirement } & & & 3,000 \\ \text { Total revenues } & 519,900 & 106,000 & 603,000 \end{array} \begin{array}{llll} \text { Cost of sales } & \$ 280,000 & \$ 50,000 & \$ 330,000 \\ \text { Bond interest expense } & 9,000 & & 3,600 \\ \text { Other expenses } & \underline{120,900} & \underline{31,000} & \underline{151,900} \\ \text { Total expenses } & \underline{409,900} & \underline{81,000} & \underline{485,500} \\ \text { Consolidated net income } & & &\underline{ 117,500}\\ \text { Noncontrolling interest share } & & &\underline{7,500} \end{array} Separate net income and Control.interest share in The interest income and expense eliminations relate to a $100,000,9% bond issue that was issued at par value and matures on January 1,2018.On January 2,2013,a portion of the bonds was purchased and constructively retired. Required: Answer the following questions. 1.Which company is the issuing affiliate of the bonds payable? 2.What is the gain or loss from the constructive retirement of the bonds payable that is reported on the consolidated income statement for 2013? 3.What portion of the bonds payable is held by nonaffiliates at December 31,2013? 4.Is Sojourn a wholly-owned subsidiary? If not,what percentage does Pitta own? 5.Does the purchasing affiliate use straight-line or effective interest amortization? 6.Explain the calculation of Pitta's $19,900 income from Sojourn.$ The interest income and expense eliminations relate to a $100,000,9% bond issue that was issued at par value and matures on January 1,2018.On January 2,2013,a portion of the bonds was purchased and constructively retired.
Required: Answer the following questions.
1.Which company is the issuing affiliate of the bonds payable?
2.What is the gain or loss from the constructive retirement of the bonds payable that is reported on the consolidated income statement for 2013?
3.What portion of the bonds payable is held by nonaffiliates at December 31,2013?
4.Is Sojourn a wholly-owned subsidiary? If not,what percentage does Pitta own?
5.Does the purchasing affiliate use straight-line or effective interest amortization?
6.Explain the calculation of Pitta's $19,900 income from Sojourn.

Definitions:

Non-accidental Deaths

Refers to deaths resulting from causes other than accidents, such as diseases or intentional harm.

P-value

The chance of getting test outcomes that are as significant or more so than what was actually seen, assuming the null hypothesis is true.

Major Diseases

Serious or significant health conditions that impact a large portion of a population or have substantial effects on individuals’ health and quality of life.

Sample Counts

The number of observations or units counted within a sample from a population.