Use the Following Information to Answer Questions

question 37

Multiple Choice

Use the following information to answer Questions
Pallet Corporation owns 90% of the outstanding common stock of Stealth Company.On January 1, 2011, Stealth Company issued $500,000, 12%, ten-year bonds.
On January 1, 2013, Pallet Corporation paid $412,000 for Stealth 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.Pallet Corporation accounts for the investment using the cost method of accounting.
-Pallet Corporation would report a balance in the Investment in Stealth Company Bonds account on December 31, 2013, of

• A)$412,000.
• B)$393,600.
• C)$410,500.
• D)$400,000.
• E)none of these.