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Arthur Inc. ( Arthur ) owns 8 0 % of Haddon Inc. ( Haddon ) . During 2 0 2 3 , Arthur sold inventory

Arthur Inc. (Arthur) owns 80% of Haddon Inc. (Haddon). During 2023, Arthur sold inventory to Haddon for $10,000. Half (50%) of this inventory remained in Haddon's warehouse at year end.
Haddon sold inventory to Arthur for $5,000.40% of this inventory remained in Arthur's warehouse at year end.
Both companies are subject to a tax rate of 40%. The gross profit percentage on sales is 20% for both companies. Unless otherwise stated, assume Arthur uses the cost method to account for its investment in Haddon.
Assume that Haddon reported an after-tax net income of $20,000 in 2023, what would be Haddon's adjusted net income for the year?
Multiple Choice
$15,000
$20,000
$19,840
$19,760

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