Pell Company Acquires 80% of Demers Company for $500,000 on January

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2010. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life.
Demers earns income and pays dividends as follows: $\begin{array}{lrrr}&2010&2011&2012\\\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \\\text { Dividends } & 40,000 & 50,000 & 60,000\end{array}$ Assume the partial equity method is applied.
-How much does Pell record as income from Demers for the year ended December 31, 2011?

A) $90,400.
B) $89,000.
C) $50,400.
D) $96,000.
E) $56,000.