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Question;1.;The Planes Company owns 100% of the outstanding;common stock of the Sands Company. Sands issued $100,000 of face value, 9%;10-year bonds on January 1, 20X3, for $96,000. The discount is being amortized;on a straight-line basis. On January 1, 20X8, Planes purchased all the bonds as;an investment for $95,000.;Required;Be specific in answering the following questions and include;numerical explanations.;a. How will;this bond issue be recorded and accounted for in 20X8 on the separate books of;Planes and Sands?;b. How will;this bond issue be accounted for on the 20X8 consolidated statements?;c. How will;this bond issue be recorded and accounted for in 20X9 on the separate books of;Planes and Sands?;d. How will;this bond issue be accounted for on the 20X9 consolidated statements?;5-11;Chapter 5;2.;Smart Corporation is a 90%-owned subsidiary of Phan;Inc. On January 2, 20X6, Smart agreed to lease $400,000 of construction;equipment from Phan for $3,000 a month on an operating lease. The equipment has;a 10-year life and is being depreciated using the straight-line method.;Required;Prepare the;eliminations and adjustments required by the intercompany lease on the Figure;5-1 partial worksheet for December 31, 20X8. Key and explain all eliminations;and adjustments.;5-12;Chapter 5;3.;Tempo Industries is an 80%-owned subsidiary of Dalie;Inc. On January 1, 20X8, Dalie leased an asset to Tempo and the following;journal entries were made;Tempo;Assets Under Capital Lease.................;$21,561;Cash.....................................;$ 5,000;Obligations;Under Capital Lease..........;16,561;Dalie;Minimum Lease Payments Receivable..........;$20,000;Cash.......................................;5,000;Unearned Interest Income.................;$ 3,439;Asset (cost of asset leased).............;18,000;Sales Profit;on Leases...................;3,561;The terms;of the lease agreement require Tempo to make five payments of $5,000 each at;the beginning of each year. The implicit interest rate used by both Dalie and;Tempo is 8%.;Required;Prepare the;eliminations and adjustments required by the intercompany lease on the Figure 5-2;partial worksheet of December 31, 20X8. Key and explain all eliminations and;adjustments.;5-13;Chapter 5;4.;On January 1, 20X8, Pope Company acquired 100% of;the common stock of Siegel Company for $300,000. On this date Siegel had total;owners' equity of $250,000.;Any;excess of cost over book value is attributable to goodwill.;Also on;July 1, 20X8, Siegel Company sold to outside investors $300,000 par value of;10-year, 10% bonds. The price received was equal to par. The bonds pay interest;semi-annually on July 1 and January 1.;During 20X8 and 20X9, Pope has appropriately accounted for its;investment in Siegel using the simple equity method.;During early;20X9, market interest rates on bonds similar to those issued by Siegel;decreased to 8%. As a result, the market value of the bonds increased. On July;1, 20X9, Pope purchased $100,000 par value of Siegel's bonds, paying $163,000.;Pope still holds the bonds on December 31, 20X9 and has amortized the premium;using the straight-line method.;Required;Complete;the Figure 5-3 worksheet for consolidated financial statements for the year;ended December 31, 20X9. Round all computations to the nearest dollar.;5.;On January 1, 20X8, Pope Company acquired 100% of;the common stock of Siegel Company for $300,000. On this date Siegel had total;owners' equity of $250,000.;Any;excess of cost over book value is attributable to goodwill.;Also on;July 1, 20X8, Siegel Company sold to outside investors $200,000 par value of;10-year, 10% bonds. The price received was equal to par. The bonds pay interest;semi-annually on July 1 and January 1.;During 20X8 and 20X9, Pope has appropriately accounted for its;investment in Siegel using the simple equity method.;During;early 20X9, market interest rates on bonds similar to those issued by Siegel;decreased to 8%. As a result, the market value of the bonds increased. On July;1, 20X9, Pope purchased $100,000 par value of Siegel's bonds, paying $112,695.;Pope still holds the bonds on December 31, 20X9 and has amortized the premium;using the effective-interest method.;Required;Complete;the Figure 5-4 worksheet for consolidated financial statements for the year;ended December 31, 20X9. Round all computations to the nearest dollar.;5-15;Chapter 5;6.;On January 1, 20X8, Pope Company acquired 100% of;the common stock of Siegel Company for $300,000. On this date Siegel had total;owners' equity of $250,000.;Any;excess of cost over book value is attributable to goodwill.;Also on;January 1, 20X8, Siegel Company sold to outside investors $300,000 par value of;10-year, 10% bonds. The price received was equal to par. The bonds pay interest;semi-annually on July 1 and January 1.;During 20X8 and 20X9, Pope has appropriately accounted for its;Investment in Siegel using the simple equity method.;During 20X8;market interest rates on bonds similar to those issued by Siegel decreased to;8%. As a result, the market value of the bonds increased. On December 31, 20X8;Pope purchased $150,000 par value of Siegel's bonds, paying $163,000. Pope;still holds the bonds on December 31, 20X9 and has amortized the premium, using;the straight-line method.;Required;Complete;the Figure 5-5 worksheet for consolidated financial statements for the year;ended December 31, 20X9. Round all computations to the nearest dollar.;5-16;Chapter 5

 

Paper#44368 | Written in 18-Jul-2015

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