On January 1, 2016, Pope Company Acquired 100% of the Common

question 25

Essay

On January 1, 2016, Pope Company acquired 100% of the common stock of Siegel Company for $300,000.On this date Siegel had total owners' equity of $250,000.Any excess of cost over book value is attributable to goodwill.Pope accounts for its Investment in Siegel using the simple equity method.
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On January 1, 2016, Siegel Company sold to outside investors $300,000 par value of 10-year, 10% bonds.The price received was equal to par.The bonds pay interest semi-annually on July 1 and January 1.
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During 2016, market interest rates on bonds similar to those issued by Siegel decreased to 8%.As a result, the market value of the bonds increased.On December 31, 2016, Pope purchased $150,000 par value of Siegel's bonds, paying $163,000.Pope still holds the bonds on December 31, 2019 and has amortized the premium, using the straight-line method.
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Required:
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Prepare the eliminating entries pertaining to the intercompany purchase of bonds outstanding for the year ended December 31, 2019.

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Definitions:

Slope

In mathematics, the measure of the steepness or incline of a line, typically defined as the ratio of the vertical change to the horizontal change.

Utility Function

An economic concept that measures preferences over a set of goods and services, reflecting satisfaction or happiness.

Indifference Curve

A graphical representation in microeconomic theory of all possible bundles of goods between which a consumer is indifferent, showing preferences of equal utility.

Same Amount Of X And Y

This refers to a situation or condition where quantities or magnitudes of two variables, X and Y, are equal.