On January 1, 2021, Jay Company acquired all the outstanding ownership shares of Zee Company. In assessing Zee’s acquisition-date fair values, Jay concluded that the carrying value of Zee’s longterm debt (eight-year remaining life) was less than its fair value by $20,000. At December 31, 2021, Zee Company’s accounts show interest expense of $12,000 and long-term debt of $250,000. What amounts of interest expense and long-term debt should appear on the December 31, 2021, consolidated financial statements of Jay and its subsidiary Zee?

Interest expense                 Long-term debt

a. $14,500 ............................    $270,000

b. $14,500 ...........................     $267,500

c. $9,500 ...........................       $270,000

d. $9,500 ...........................      $267,500