Reference no: EM131914863
Problem
Mom Corporation acquired 75 percent of Daughter Company's voting shares on January 1, 20x7, at underlying book value. Om December 31, 20x7, it also purchsaed $300,000 par value 9 percent Daughter bonds, which had been issued on January 1, 20x3 to Parry Corporation (Unaffiliated with either Mom or Daughter) at a $20,000 premium. The bonds were orginally issued with a 10-year maturity and pays interest annually on December 31. During preparation of the consolidated financial statements for December 31, 20x7, the following consolidation entry was included in the consolidattion worksheet:
Bonds Payable 300,000 (Debit), Bond Premium 11,902 (Debit), Loss on Bond Retirement 12,098 (Debit) and Investment in Daughter Bonds 324,000 (Credit)
Based on the information given above, what is the interest income that must be eliminated in preparing the 20x17 consolidated financial statements?
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