Paulina, Incorporated, owns $90$ percent of Southport Company. On January $1,2021,$ Paulina acquires half of Southport$$s $$500,000$ outstanding $13-$year bonds. These bonds had been sold on the open market on January $1,2018,$ at a $12$ percent effective rate. The bonds pay a cash interest rate of $10$ percent every December $31$ and are scheduled to come due on December $31,2030.$ Southport issued this debt originally for $$435,765.$ Paulina paid $$283,550$ for this investment, indicating an $8$ percent effective yield.

a$.$

Assuming that both parties use the effective rate method, what gain or loss from the retirement of this debt should be reported on the consolidated income statement for $2020?$

b$.$

Assuming that both parties use the effective rate method, what balances should appear in the Investment in Southport Bonds account on Paulina$$s records and the Bonds Payable account of Southport as of Dececmber $31,2021?$

c$.$

Assuming that both parties use the straight$-$line method, what consolidation entry would be required on December $31,2021,$ because of these bonds? Assume that the parent is not applying the equity method.