Campbell Inc. owned all of Gordon Corp. For 2013, Campbell reported net income (without consideration of its investment in Gordon) of $280,000 while the subsidiary reported $112,000. The subsidiary had bonds payable outstanding on January 1, 2013, with a book value of $297,000. The parent acquired the bonds on that date for $281,000. During 2013, Campbell reported interest income of $31,000 while Gordon reported interest expense of $29,000. What is consolidated net income for 2013?
A) $406,000.
B) $374,000.
C) $378,000.
D) $410,000.
E) $394,000.

Question

Quizplus · Accepted Answer

Income of the Parent $280,000 + Income of the Sub $112,000 - Difference in Interest on Intra-Entity Bonds ($31,000 - $29,000) $2,000 + Gain on Bonds Purchase ($297,000 - $281,000) $16,000 = $406,000 Consolidated Net Income