• Airlangga University

• PR 12345

Consolidated income statement (purchase of parent’s bonds)

Comparative income statements for Laode Corporation and its 80 percent-owned subsidiary,

Ucok Corporation, for 2017 are summarized as follows (in thousands):

Laode Ucok

Sales $2,000 $800

Income from Ucok 282.4

Bond interest income 33

Cost of sales 1,250 400

Operating expenses 250 125

Bond interest expenses 87

Net income $695.4 $308

Laode purchased its interest in Ucok on January 1, 2016, when the book value of Ucok’s net

assets equaled fair value. On January 2, 2017, Ucok purchased $300,000 of Laode’s $900,000

par of 10 percent, 10-year outstanding bonds for $270,000 in the bond market. There is an

unamortized premium of $30,000 on the bond issue. The company use straight-line

amortization.

Required: Prepare a consolidated income statement for Laode Corporation and Subsidiary for

the year ended December 31, 2017