Bradley Corporation sold bonds to Flood Company in 20X2 at 90 . At the end of 20X4, Century Corporation purchased the bonds from Flood Company at 105. Bradley Corporation then retired the full bond issue on December 31, 20X7, at 101. Century Corporation holds 80 percent of the voting stock of Bradley Corporation. Neither Century Corporation nor Bradley Corporation owns stock of Flood Company.

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a. Indicate how each of the three bond transactions should be recorded by the companies involved.

b. Indicate when, if at all, the consolidated entity headed by Century Corporation should recognize a gain or loss on bond retirement and indicate whether a gain or a loss should be recognized.

c. Will income assigned to the noncontrolling shareholders of Bradley Corporation be affected by the bond transactions? If so, in which years?