Soft Limited Owns 70% of the Shares of Hard Co

question 6

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 on 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 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 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:

Pluralistic Society Model

A societal structure that is characterized by the coexistence of diverse groups maintaining their individual cultural traditions.

Bicultural Identity Model

A psychological model explaining how individuals navigate and integrate two distinct cultural identities, often related to dual heritage or acculturation processes.

Multicultural Model

A framework used to understand and appreciate cultural diversity, emphasizing respect, inclusion, and equitable treatment of people from different cultural backgrounds.

Cultural Assimilation Model

A theory describing how individuals or groups adopt the culture of another group, losing their original identity.