Pollard Corporation owns 90% of the outstanding common stock of Steele Company. On January 1, 2008, Steele Company issued $500,000, 12%, ten-year bonds.

On January 1, 2010, Pollard Corporation paid $412,000 for Steele Company bonds with a par value of $400,000 and a carrying value of $393,600. Both companies use the straight-line method to amortize bond premiums and discounts. Pollard Corporation accounts for the investment using the cost method of accounting.

Pollard Corporation would report a balance in the Investment in Steele Company Bonds account on December 31, 2010, of (Show Work)

a. $412,000.

b. $393,600.

c. $410,500.

d. $400,000.

e. none of these.