A subsidiary is acquired on January 1 , Year 1 for $10 million. The subsidiary's book value at the date of acquisition was $2 million. Following is revaluation information for the subsidiary's identifiable net assets at the date of acquisition: Goodwill recognized in the acquisition was unimpaired in Year 1, but became fully impaired during Year 2 . The subsidiary did not declare any dividends during this period, and reported no other comprehensive income. The subsidiary reported net income as follows: The parent uses the complete equity method to report its investment on its own books. Equity in net income for Year 3, reported on the parent's books, is: a) $1,150,000 b) $1,350,000 c) $850,000 d) $1,000,000