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Search Company is a 90% owned subsidiary of Passage Company. On January 1, 2016, Search Company purchased for $680,000 bonds of Passage Company that had
Search Company is a 90% owned subsidiary of Passage Company. On January 1, 2016, Search Company purchased for $680,000 bonds of Passage Company that had a carrying value of $725,000 (par value $700,000). The bonds mature on December 31, 2017. Both companies use the straight-line method of amortization and have a December 31 year-end. The increase in 2016 consolidated income (i.e., income before subtracting noncontrolling interest) is:
A. $54,000.
B $36,000.
C. $45,000.
D. $44,000.
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