On May 1, 2011, Spagetti Company, the 90%-owned subsidiary of Pasta Corporation, issued to the public $200,000 face amount of 7% bonds (interest payable annually) due May 1, 2016, for $184,442, a yield rate of 9%. On April 30, 2013, when the carrying amount of the bonds was $189,876, Pasta acquired $80,000 face amount of the outstanding 7% bonds in the open market for $74,032, a yield rate of 10%.

A) Prepare a working paper to show how the $1,918 intercompany gain realized by Spagetti on April 30, 2013, will be recognized in the accounting records of Pasta Corporation and Spagetti Company for the three years ending April 30, 2016. Use the format provided on the first solution page. You should place amortization tables below the format.

B) Prepare the appropriate WP Eliminations in GJ format for this intercompany transaction on April 30, 2013, April 30, 2014 and April 30, 2015 and April 30, 2016.