4. At the date of acquisition, a subsidiarys inventory (LIFO, still held by the subsidiary) is overvalued by $600, its plant assets (10-year life, straight-line) are overvalued by $4,000, and it has previously unreported intangibles valued at $1,000 (2-year life, straight-line). Goodwill from the acquisition is not impaired. In the third year following acquisition, the subsidiary reports net income of $2,500. Using the complete equity method, in the third year the parent reports equity in the net income of the subsidiary of:

1. $3,500

2. $2,100

3. $2,400

4. $2,900