Pollard Corporation owns 90% of the outstanding common stock of Steele Company. On January 1, 2008, Steele Company issued $500,000, 12%, ten-year bonds.

On January 1, 2010, Pollard Corporation paid $412,000 for Steele Company bonds with a par value of $400,000 and a carrying value of $393,600. Both companies use the straight-line method to amortize bond premiums and discounts. Pollard Corporation accounts for the investment using the cost method of accounting.

11.The total gain or loss on the constructive retirement of the debt to be reported in the 2010 consolidated income statement is

a.$12,000 loss.

b.$12,000 gain.

c.$18,400 loss.

d.$18,400 gain.

e.$6,400 loss.

12.Pollard Corporation would report a balance in the Investment in Steele Company Bonds account on December 31, 2010, of

a.$412,000.

b.$393,600.

c.$410,500.

d.$400,000.

e.none of these.

13.Compute the noncontrolling interest in the 2010 consolidated income assuming that Pollard Corporation reported a net income of $300,000 (includes dividend income from Steele Company). Steele Company reported net income of $180,000 and declared and paid cash dividends of $100,000.

a.$18,000

b.$17,440

c.$17,360

d.$18,560

e.none of these.