Effect on consolidated net income of acquisition of affiliates debt from non-affiliate

A Parent Company owns 100 percent of its Subsidiary. During 2021, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $900,000 and the subsidiary reports net income of $360,000. The parent had a bond payable outstanding on January 1, 2021, with a carrying value equal to $756,000. The Subsidiary acquired the bond on January 1, 2021, for $711,000 During 2021, the Parent reported interest expense (related to the bond) of $63,000 while the Subsidiary reported interest income (related to the bond) of $57,600. What is consolidated net income for the year ended December 31, 2021?

Select one:

a. $1,260,000

b. $1,310,400

c. $1,265,400

d. $1,305,000