5. Esrom Corp ., a cash basis taxpayer , and Fynbo Corp ., an accrual basis taxpayer , are parent - subsidiary corporations . During Year 3 Esrom bought and paid for $150 , 000 in supplies from Fynbo . Additionally , on December 1 of Year 3 the two corporations entered into an agreement whereby* Esrom would provide consulting services to Fynbo , with each month's services being payable on the 15th of the following month . During December of Year 3 Esrom provided services under this agreement worth $20, 000 . Including all of the above transactions , Esrom's taxable income for the year amounted to $5 10, 000 , while Fynbo's amounted to $250, 000 . What amount of taxable income* should Esrom and Fynbo report on their Year 3 consolidated tax return ? 2 ) $760, 000 b ) $6 10 , 000 $780, 000 d ) $630 , 000