Intra-group loan interest expenses and Retained Earnings for group consolidation

Dear sir,

I came across a practice question where a parent has hold a loan to a subsidiary that has been outstanding long before the acquisition. In the provided answer, for consolidation of the group retained earnings, the expenses on an intra-group loan is not added back to the end-of-year retained earnings of the subsidiary.
However, I think on consolidation, the interest expenses is saved and thus should be added back to the retained earnings of the subsidiary; and at the same time, the interest income of the parent should be deducted from the parent retained earnings.
Can you please help solve my doubt? thank you!

regards
Lm