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Wagner, a holder of a $1,000,000 Palmer, Inc. bonds, collected the interest due on March 31, year 1, and then sold the bonds to Seal, Inc. for $975,000. On that date, Palmer, a 75% owner of Seal, had a $1,075,000 carrying amount for the bonds. What was the effect of Seal’s purchase of Palmer’s bond on the retained earnings and noncontrolling interest amounts reported in Palmer’s March 31, year 1 consolidated balance sheet?
Retained earnings
Noncontrolling interest