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

question 94

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 consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2014?

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Definitions:

Dispositionism

Dispositionism is a psychological theory that attributes behavior to inherent qualities or traits of the individual rather than to external circumstances.

Collectivism

An ideology or value system that emphasizes the priority of group goals over individual goals and the importance of cohesion within social groups.

Situationism

A theory in psychology that suggests human behavior is greatly influenced by external situational factors rather than by internal traits or motivations.

Fundamental Attribution Error

The tendency for observers to underestimate situational influences and overestimate personal characteristics when explaining others' behaviors.