Granite Company issued $200,000 of 10 percent first mortgage bonds on January 1, 20X4, at 105....
Question:
Granite Company issued $200,000 of 10 percent first mortgage bonds on January 1, 20X4, at 105. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. Mortar Corporation purchased $140,000 of Granite's bonds from the original purchaser on December 31, 20X8, for $125,000. Mortar owns 75 percent of Granite's voting common stock.
Based on the information given, what amount of premium on bonds payable will be eliminated in the preparation of the 20X8 consolidated financial statements?
a. $3,500
b. $2,800
c. $5,000
d. $2,500
Intercompany Transactions
When companies merged or enter into business combination, they are prohibited from engaging into transactions with each other. If that happens, eliminations of transaction must be made first before it will be consolidated.
Answer and Explanation:
Become a Study.com member to unlock this answer! Create your account
View this answerSee full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
