Assume a parent company owns a 100% controlling interest in its long-held subsidiary. The following excerpts are from the parent's and subsidiary's "stand alone" pre-consolidation income statements for the year ending December 31,2019, prior to nay investment bookkeeping or intercompany adjustments:

Parent Subsidiary

Revenues $4,000,000 $2,500,000

COGS (2,800,000) (1,500,000)

Gross Profit 1,200,000 1,000,000

Selling general & Admin. expenses (780,000) (606,000)

Net Income $ 420,000 $ 394,000

On January 1, 2019 neither company held any inventories purchased from the other affiliate. All of the sales made wither company have the same gross margin regardless of whether they are made to affiliates or non-affiliates. The subsidiary declared and paid $200,000 of dividends during 2019.

Pre-consolidation bookkeeping, upstream intercompany sales, profits in ending inventory - Cost method

Assume during the year ended December 31, 2019, a subsidiary sold to its parent $400,000 of merchandise. At December 31, 2019, the parent still held inventory 25% of the goods purchased from the subsidiary during 2019. What is the amount of "income from subsidiary" recognized by the parent company if it applies the cost method of pre-consolidation investment bookkeeping?

A.) $160,000

B.) $200,000

C.)$354,000

D.) $356,500