Petes Farm Equipment owns 60 percent of Donovans

Agricultural Supply. Petes has $1,000,000 of bonds

payable outstanding with an unamortized discount of

$38,000. Donovans buys $400,000 of the bonds from an

unrelated party for $360,000. What is the amount of

worksheet elimination at the end of the year of the invest-

ment with regard to the Loss or Gain on Early Retirement

of Debt?

a.

$24,800 loss

b.

$2,000 gain

c.

$24,800 gain

d.

$2,000 loss