On January 1, 20X4, Passive Heating Corporation paid \(\$ 104,000\) for \(\$ 100,000\) par value, 9 percent bonds of Solar Energy Corporation. Solar Energy Corporation had issued \(\$ 300,000\) of the 10 -year bonds on January 1, 20X2, for \(\$ 360,000\). Passive previously had purchased 80 percent of the common stock of Solar on January 1, 20X1, at underlying book value.

Passive Heating Corporation reported operating income (excluding income from subsidiary) of \(\$ 50,000\), and Solar Energy Corporation reported net income of \(\$ 30,000\) for \(20 \times 4\).

\section*{Required}

Select the correct answer for each of the following questions.

1. What amount of interest expense should be included in the \(20 \times 4\) consolidated income statement?

a. \(\$ 14,000\).

b. \(\$ 18,000\).

c. \(\$ 21,000\).

d. \(\$ 27,000\).

2. What amount of gain or loss on bond retirement should be included in the \(20 \times 4\) consolidated income statement?

a. \(\$ 4,000\) gain.

b. \(\$ 4,000\) loss.

c. \(\$ 12,000\) gain.

d. \(\$ 16,000\) loss.

3. Income assigned to the noncontrolling interest in the \(20 \times 4\) consolidated income statement should be:

a. \(\$ 6,000\).

b. \(\$ 8,100\).

c. \(\$ 8,400\),

d. \(\$ 16,000\).