Pebble Beach Inc. owns 80% of the common shares of Skokie Corp.On January 1, 2018, Pebble Beach issued bonds with a parvalue of $410,000which will mature on January 1, 2023.The bonds bear interest at an annual rate of 9%, with annual interest payments made each December 31^st.At thedate of issueof the bonds, Pebble Beach received proceeds of $400,000.On January 1, 2020, Skokie purchased 60% of Pebble Beach's bonds on the open market for $225,000.Both companies use the effective interest method.Both companies have a December 31st year- end and pay income taxes at a rate of 40%.Bond gains and losses are to be allocated to each company.During 2020, Skokie earned a net income of $80,000 and paid dividends of $20,000.

Market rates (Yield) for these bonds was 8.45% atissue date January 1, 2018for Pebble Beach.

Market rate (Yield) for Skokie atinvestment date January 1, 2020was 10.45%

REQUIRED:

a)Calculate the amount of the gain or loss that will appear as a separate item on the 2020 consolidated income statement, as a result of the bond transaction. (2 marks)

b)Calculate the after-tax gain or loss to Skokie on the purchase of the Bonds. (2 marks)

c)Calculate the after-tax gain or loss to Pebble Beach on the purchase of the Bonds.(2 marks)

d)What amount of after-tax interest expense (if any) would have to be eliminated in 2020 as a result of the purchase of the Bonds?(3 marks)

e)Calculate the non-controlling interest's share of Skokie's income for the year-ended

December 31, 2020.(3 marks)

f)What value would be shown on Pebble Beach's December 31, 2020 Consolidated Balance Sheet for the Bond issue?(3 marks)