Question

Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased. Pluto Corporation owns 65% of Saturn's voting shares. On Jan 1, 20X7, Pluto Corporation purchased $120,000 face value of Saturn bonds from Star for $118,020. On the date Pluto purchased the bonds, the bonds' carrying value on Saturn's book was $126,019. The bonds pay 12 percent interest annually on December 31. The preparation of consolidated financial statements for Saturn and Pluto at December 31, 20X9, required the following consolidating entry:
  

Bonds Payable	120,000
Premium on Bonds Payable	3,470
Interest Income	14,705
Investment in Saturn Corporation Bonds		118,838
Interest Expense		13,461
Investment in Saturn Corporation Stock		3,819
NCI in NA of Saturn Corp.		2,057

Based on the information given above, if 20X9 consolidated net income of $50,000 would have been reported without the consolidating entry provided, what amount will actually be reported?

Answer 1

Answer is $48,756

Amount reported = consolidated net income + interest expense – interest revenue = 50000+13461-14705 = $48756