On January 1, 2022, Pronto Company acquired all of Speedy Inc.s voting stock for $31,200,000. Speedys net assets were reported at amounts approximating book value, but Pronto determined that Speedy had the following previously unreported intangible assets:

Developed technology, fair value $2,600,000, 5-year life Favorable leases, fair value $1,300,000, 4-year life

Speedys shareholders equity on January 1, 2022, was $13,000,000. It is now December 31, 2023 (two years later). Speedy reported net income of $1,040,000 in 2022. There are no impairments of identifiable intangibles or goodwill in 2022 or 2023. Pronto uses the complete equity method to report its investment in Speedy on its own books. Speedys December 31, 2023, trial balance appears below.

	Dr (Cr)
Current assets	$26,000,000
Property and equipment, net	65,000,000
Liabilities	(75,400,000)
Capital stock	(2,600,000)
Retained earnings, January 1	(11,440,000)
Sales revenue	(91,000,000)
Cost of goods sold	78,000,000
Operating expenses	11,440,000
	$0

On the December 31, 2023, consolidated balance sheet, favorable leases are reported at

Select one:

a. $1,300,000

b. $650,000

c. $975,000

d. $0