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

question 110

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, 2010, 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, 2012, for 95% of the face value. Both companies utilized the straight-line method of amortization.
-What balances would need to be considered in order to prepare the consolidation entry in connection with these intra-entity bonds at December 31, 2012, the end of the first year of the intra-entity investment? Prepare schedules to show numerical answers for balances that would be needed for the entry.

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Definitions:

Pupil

The opening in the center of the iris of the eye, which adjusts in size to regulate the amount of light reaching the retina.

Upside-down Image

The phenomenon where images projected onto the retina are perceived as upright due to the brain's processing, despite being inverted.

Retina

The light-sensitive layer of tissue at the back of the inner eye that converts light images into electrical signals sent to the brain.

Bipolar Cells

A type of neuron found in the retina of the eye, transferring information from photoreceptors to ganglion cells, thereby participating in the processing of visual information.