Gardner Corp. owns 80% of the voting common stock of Lockhart Co. Lockhart owns 70% of Canning Co. Gardner and Lockhart both use the initial value method to account for their investments. The following information is available from the financial statements and records of the three companies:

	Gardner Corp.	Lockhart Co.	Canning Co.
Separate company net income before investment income	$900,000	$650,000	$150,000
Dividend income from investment in subsidiary	250,000	120,000
Deferral of intra-entity gains	110,000	80,000	20,000
Amortization expense related to excess fair value
over book value of investment		40,000	25,000

Separate company net income includes intra-entity gains before the consolidating deferral but does not include dividend income from investment in subsidiary.

The accrual-based net income of Gardner Corp. is calculated to be

Multiple Choice

$1,114,800.

$1,212,450.

$1,272,800.

$1,382,800.

$1,393,500.