Soren Corporation Is an 80% Owned Subsidiary of Passia Company

Soren Corporation is an 80% owned subsidiary of Passia Company. Soren purchased bonds of Passia Company for $103,000. Passia Company reported the bond liability on the date of purchase at $100,000 less unamortized discount of $5,000. Assuming that the constructive gain or loss is material, the consolidated income statement should report an:

A) ordinary loss of $8,000.
B) ordinary gain of $8,000.
C) extraordinary loss of $8,000 adjusted for income tax effects.
D) extraordinary gain of $8,000 adjusted for income tax effects.