Pang Corporation owns 80 percert interest in Sunda Corporation. On January 1, 2016, Sunda purchased S100,000 par of Pang's $1,000,000 outstanding bonds for S98,000 in the bond market. Pang's bonds have a 10 percent interest rate, www.downloadslide.net Intercompany Profit Transactions-Bonds 259 paid on January 1 and July 1, and mature on January 1, 2021. There was a $50,000 unamortized premium on the bond issue on January 1, 2016. Assume straight-line amortization. 1. The constructive gains or loss that should appear in the consolidated income statement of Pang Corporation and Subsidiary for 2016 is: a $2,000 loss b $7,000 gain e $5,000 gain d None of the above 2. Interest income that should appear in the 2016 consolidated income statement for Pang's bond issue is: a $14,000 > $10,400 c $10,000 d None of the above