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

question 114

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, 2016?

---

Definitions:

Depression

A mental health disorder characterized by persistently depressed mood, loss of interest in activities, and other symptoms that impair daily life.

Terrible Things

Generally refers to events or actions that are extremely bad, horrifying, or devastating in nature.

Schizophrenia

A chronic and severe mental disorder that affects how a person thinks, feels, and behaves, often characterized by delusions, hallucinations, and cognitive difficulties.

Negative Symptoms

In psychiatry, refers to the absence or diminution of normal psychological capabilities, such as motivation or emotional expression, especially in schizophrenia.