Will a gain or loss be reported in the 20x6 consolidated, Ask an Expert

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Bundle Company issued $550,000 par value, 10-year bonds at 104 on January 1, 20X3, which Mega Corporation purchased. The coupon rate on the bonds is 9 percent. Interest payments are made semiannually on July 1 and January 1. On July 1, 20X6, Parent Company purchased $220,000 par value of the bonds from Mega for $212,200. Parent owns 70 percent of Bundle's voting shares.

A. Will a gain or loss be reported in the 20X6 consolidated financial statements for Parent for the constructive retirement of bonds? What amount will be reported? (Do not round your intermediate calculations. Round your final answers to nearest whole dollar.)

B. How much will Parent's purchase of the bonds change consolidated net income for 20X6?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M946441

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