How do I prepare a consolidated elimination worksheet when the parent purchases all of subsidiary's bonds on open market?

To prepare a consolidated elimination worksheet when the parent company purchases all of its subsidiary's bonds on the open market, you will need to follow several steps:

1. Gather the necessary financial information: Collect the financial statements of both the parent company and the subsidiary. This includes balance sheets, income statements, and statements of cash flows.

2. Eliminate intercompany transactions: Identify any intercompany transactions between the parent and subsidiary related to the bond purchases. These transactions need to be eliminated for consolidation purposes. In this case, since the parent company has acquired all of the subsidiary's bonds, any bonds held by the subsidiary should be eliminated from the consolidated financial statements.

3. Adjust subsidiary's financial statements: The subsidiary's financial statements need to be adjusted to reflect the elimination of the bonds. Remove the bonds from the subsidiary's books, as they are now owned fully by the parent company. Additionally, adjust any interest income or expense related to the bonds accordingly.

4. Consolidate the financial statements: Combine the adjusted financial statements of the parent company and the subsidiary to prepare the consolidated financial statements. Add together the assets, liabilities, equity, revenues, and expenses of both entities. Exclude any intercompany balances or transactions that have been eliminated.

5. Prepare a consolidated elimination worksheet: The consolidated elimination worksheet is used to document and reconcile the elimination entries made during the consolidation process. This worksheet should include a breakdown of the intercompany bond transactions that have been eliminated, as well as any adjustments made to the subsidiary's financial statements.

Remember to consult with relevant accounting standards (such as Generally Accepted Accounting Principles - GAAP) and follow your organization's specific guidelines for consolidation and elimination procedures. It is advisable to seek professional assistance from a qualified accountant or financial advisor if you are unsure about any aspect of the consolidation process.