Big Corporation Receives Management Consulting Services from Its 92 Percent

Multiple Choice

Big Corporation receives management consulting services from its 92 percent owned subsidiary, Small Inc. During 20X7, Big paid Small $125,432 for its services. For the year 20X8, Small billed Big $140,000 for such services and collected all but $7,900 by year-end. Small's labor cost and other associated costs for the employees providing services to Big totaled $86,000 in 20X7 and $121,000 in 20X8. Big reported $2,567,000 of income from its own separate operations for 20X8, and Small reported net income of $695,000.
Based on the preceding information, what amount of consolidated net income should be reported in 20X8?

A) $3,262,000
B) $4,050,000
C) $3,254,100
D) $3,122,000