Light Corporation owns 80 percent of Sound Company\'s voting shares. On January

Question

Light Corporation owns 80 percent of Sound Company's voting shares. On January 1, 20X7, Sound sold bonds with a par value of $300,000 when the market rate was 7 percent. Light purchased two thirds of the bonds; the remainder was sold to non-affiliates. The bonds mature in ten years and pay an annual interest rate of 6 percent. Interest is paid semiannually on June 30 and Dec 31. Based on the information given above, what amount of interest expense should be reported in the 20X8 consolidated income statement? A. $0 B. $6,548 C. $6,511 D. $19,643

Explanation / Answer

Based on the information provided, interest which should be reported in the 20X8 consolidated financial statement should be $ 19,643.

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