Sydney Company issued $1,000,000 par value 10-year bonds at 102 on January 1, 20X5, which Melbourne Corporation purchased. The coupon rate on the bonds is 9 percent. Interest payments are made semiannually on July 1 and January 1. On Jan 1, 20X8, Perth Company purchased $500,000 par value of the bonds from Melbourne for $492,200. Perth owns 65 percent of Sydney's voting shares.

a. What amount of gain or loss will be reported in Sydney's 20X8 income statement on the retirement of bonds?

b. Will a gain or loss be reported in the 20X8 consolidated financial statements for Perth for the constructive retirement of bonds? What amount will be reported?

c. How much will Perth's purchase of the bonds change consolidated net income for 20X8?

d. Prepare the worksheet consolidating entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements at December 31, 20X8.

e. Prepare the worksheet consolidating entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements at December 31, 20X9.