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

A Parent Company owns 100 percent of its Subsidiary. During 2022, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $450,000 and the subsidiary reports net income of $180,000. The parent had a bond payable outstanding on January 1, 2021, with a carrying value equal to $378,000. The Subsidiary acquired the bond on January 1, 2021, for $355,500. During 2022, the Parent reported interest expense (related to the bond) of $31,500 while the Subsidiary reported interest income (related to the bond) of $28,800.

What is consolidated net income for the year ended December 31, 2022?

Select one:

a. $655,200

b. $630,000

c. $652,500

d. $632,700