Pargus Corporation owned 51% of the voting common stock of Sanat, Inc. The parent's interest was acquired several years ago and no goodwill or other allocation was recorded in connection with the acquisition price. On January 1, 2017, Sanat sold $14,000 (par) in ten-year bonds to the public at a premium. The bonds pay a 10% interest rate every December 31. Pargus acquired 40% of these bonds on January 1, 2019, for $6,400. At the time, Sanats bonds carrying value still had $1,600 unamortized premium on it. Both companies utilized the straight-line method of amortization.

Required: 1. Calculate gain/loss from the effective retirement on January 1, 2019; (specify if gain or loss) 2. Calculate the annual interest expense/revenue for Sanat and Pargus; 3. Prepare the consolidating working paper entries required for the year ending December 31, 2019. 4. Prepare the consolidating working paper entries required for the year ending December 31, 2020.