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Dennis Company is an 80%-owned subsidiary of Kay Industries. Dennis Company issued 10-year, 8% bonds in the amount of $1,000,000 on January 1, 20X1. The bonds were issued at face value, and interest in payable each January 1. On January 1, 20X3, Kay Industries purchased all of the Dennis bonds for $968,000. Kay will amortize the discount on a straight-line basis. For the years ending (a) December 31, 20X3, and (b) December 31, 20X4, determine the effects of this transaction:

1. On consolidated net income.

2. On the distribution of income to the controlling and noncontrolling interests.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M966361

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