Exhibit 13-2

On January 1, 2017, the Clutz Company purchased 30% of the 1,000,000 shares of Nancy's common stock for $15,000,000 when 30% of Nancy's net assets totaled $12,000,000. The excess of purchase price over the underlying assets was attributable to undervalued depreciable plant assets with a remaining useful life of ten years. Nancy reported net income of $8,000,000 and paid cash dividends of $2,000,000 during 2017.

Refer to Exhibit 13-2. What should the income reported by Clutz during 2017 from its investment in the Nancy Company be?

a. $2,100,000

b. $2,900,000

c. $2,400,000

d. $ 600,000