8) Subsidiary purchase of Parent Company Outstanding Bonds:

Paent Inc. had $600,000 par of 8% bonds payable outstanding on January 1, 2011 due January 1, 2015 with an unamortized discount of $20,000. Subsidiary is a 90%-owned subsidiary of Paent. On January 2, 2011, Subsidiary Corporation purchased $180,000 par value of Paent's outstanding bonds for $165,000. The bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used.

With respect to the bond purchase, What is the amount of the total gain or (loss) that will be shown on the consolidated income statement of Paent Corporation and Subsidiary for 2011? What is the amount of the parent share of the Gain or loss?

Computations:

% of bonds purchased	30%
Book Value of Bonds
Price paid for Bonds
Total Gain/(Loss)
Parent share of G/(L)