Paggle Corporation owns 80% of Spillway Inc.'s common stock that was purchased at its underlying book value. At the time of purchase, the book value and fair value of Spillway's net assets were equal. The two companies report the following information for 2014 and 2015.

During 2014, one company sold inventory to the other company for $50,000 which cost the transferor $40,000. As of the end of 2014, 30% of the inventory was unsold. In 2015, the remaining inventory was resold outside the consolidated entity.

2014 Selected Data: Paggle Spillway

Sales Revenue $600,000 $320,000

Cost of Goods Sold 320,000 155,000

Other Expenses 100,000 89,000

Net Income $180,000 $76,000

Dividends Paid 19,000 0

2015 Selected Data: Paggle Spillway

Sales Revenue $580,000 $445,000

Cost of Goods Sold 300,000 180,000

Other Expenses 130,000 171,000

Net Income $150,000 $94,000

Dividends Paid 16,000 5,000

For 2014, consolidated net income will be what amount if the intercompany sale was downstream?

	A.	$253,000
	B.	$256,000
	C.	$259,000
	D.	$180,000