Gain/Loss Calculation; Bond Consolidation Entry Pell Inc. owns 100% of the outstanding com¬

mon stock of Sull Inc. On 1/1/05, Pell acquired in the open market 40% of Suli’s outstanding 10% bonds at a cost of $430,000. On 1/1/05, the carrying value of all of the bonds ($1,000,000 face amount) was $1,040,000. Their maturity date is 12/31/08.

1. What is the gain or loss on debt extinguishment to be reported in consolidation for 2005?

2. Prepare the bond-related consolidation entry at 1/1/05.