Fargus Corporation owned 55% of the voting common stock of Sanatee, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition price.

On January 1, 2017, Sanatee sold $1,400,000 in 10-year bonds to the public at 109. The bonds pay a 10% interest rate every December 31st. Fargus acquired 50% of these bonds on January 1, 2019, for 95% of the face value. Both companies utilized the straight-line method of amortization.

a) What balances would need to be considered in order to prepare the consolidation entry in connection with these intra-entity bonds at December 31, 2019, the end of the first year of the intra-entity investment? Prepare schedules to show numerical answers for balances that would be needed for the entry.

b) How much is the gain from intra-entity bond transfer on 1/1/2019?

c) What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2019?

d) What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2020?

e) Assume that during the year of 2019, Sanatee has income of 400,000 and Fargus has income of 900,000 (with investment income included), how much is the equity income in Sanatee?