Pachelor Corporation Owns 70% of the Outstanding Stock of Stabb

question 6

Essay

Pachelor Corporation owns 70% of the outstanding stock of Stabb Company.On January 1,2010,Stabb issued $1,000,000 in 7% bonds that matured on January 1,2015.At the time of issuance,the bonds were sold at a discount of $125,000.At January 2,2012,Pachelor purchased the bonds for $1,400,000,and constructively retired the debt.Interest is paid annually on January 1.Straight-line amortization is used by both companies.
Required:
1.Calculate the gain or loss that the consolidated entity incurred to retire the debt.
2.Prepare eliminating/adjusting entries for the consolidating work papers for the year ended December 31,2012.

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Definitions:

Manufacturer

An individual, business, or entity that produces finished goods from raw materials through the use of tools, human labor, and machinery.

Leather Handbags

High-quality bags made from the skin of animals, specifically designed for carrying personal items, known for their durability, aesthetic appeal, and often considered a fashion statement.

Historical Period

A distinct phase in history characterized by particular events, developments, or cultural norms.

Widespread

Something that is found in many places or affects a large number of people.