The consolidated balance sheet of Par Corporation and Say (its 80 percent-owned subsidiary) at December 31, 2011, includes the following items related to an 8 percent, $500,000 outstanding bond issue:
Current Liabilities
Bond interest payable (6 months' interest due January 1, 2012) ............................. $ 20,000
Long-Term Liabilities
8% bonds payable (maturity date January 1, 2016, net of $15,000 unamortized discount) ......................................................................................................... $485,000
Par Corporation is the issuer, and straight-line amortization is applicable. Say purchases $300,000 par of the outstanding bonds of Par on July 2, 2012, for $287,400.
REQUIRED
1. Calculate the following:
a. The gain or loss on constructive retirement of the bonds
b. The consolidated bond interest expense for 2012
c. The consolidated bond liability at December 31, 2012
2. How would the amounts determined in part 1 differ if Par purchased Say's bonds?