Consolidated amounts when affiliates debt is acquired from non-affiliate

Assume that a Parent company owns 75 percent of its Subsidiary. On January 1, 2016, the Parent company had a $100,000 (face) 8 percent bond payable outstanding with a carrying value of $96,600. Several years ago, the bond was originally issued to an unaffiliated company for 92 percent of par value. On January 1, 2016, the Subsidiary acquired the bond for $92,000.

During 2016, the Parent company reported $400,000 of (pre-consolidation) income from its own operations (i.e., prior to any equity method adjustments by the Parent company) and after recording interest expense. The Subsidiary reported $120,000 of (pre-consolidation) income from its own operations after recording interest income. Related to the bond during 2016, the parent reported interest expense of $8,500 while the subsidiary reported interest income of $9,200.

Determine the following amounts that will appear in the 2016 consolidated income statement:

Note: Use a negative sign with your answer to indicate a loss on constructive retirement of bond payable, if applicable.

Account	Amount
a. Interest income from bond investment	Answer
b. Interest expense on bond payable	Answer
c. Gain (Loss) on constructiveretirement of bond payable.	Answer
d. Controlling interest in consolidated net income	Answer
e. Noncontrolling interest in consolidated net income	Answer