$50.00 Advanced Acct Q3
S Company issued 10-year, 8% bonds with a par value of $1,000,000 on Jan 2, 2009 for $1,040,000. Interest is payable semiannually on June 30 and December 31. On December 31, 2010, P COmpany purchased $700,000 of S par value bonds for $670,000. S is an 80% owned subsidiary of P. Both companies use the straight-line method to amortize bond discounts and premiums. S declared cash dividends of $100,000 in 2010 and reported net income of $220,000 for the new year. P reported net income of $350,000 for 2010 and paid dividends of $160,000 during 2010. Required: A. Compute the total gain or loss on the constructive retirement of the debt. B. Allocate the total gain or loss between S company and P company. C. Compute the controlling interest in consolidated net income for 2010. D. Prepare in general journal form the intercompany bond elimination entries for the consolidated statements workpaper prepared on December 31, 2010.