Fargus Corporation Owned 51% of the Voting Common Stock of Sanatee

question 64

Essay

Fargus Corporation owned 51% of the voting common stock of Sanatee, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition price.
On January 1, 2012, Sanatee sold $1,400,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on January 1, 2014, for 95% of the face value. Both companies utilized the straight-line method of amortization.
What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2014?

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Definitions:

Disclosure

Revealing personal or sensitive information to others.

Pace

The speed or rate at which something happens or is done.

Feedback

Information provided about reactions to a product, a person's performance of a task, etc., used as a basis for improvement.

Group Interaction

The process of communication and interaction that takes place among members of a group, influencing dynamics, decision-making, and individual behavior.