Potter Corporation owns 60 percent of Snape Company's voting shares. On January 1, 20X4, Snape sold bonds with a par value of $400,000 when the market rate was 6 percent. Potter purchased one-third of the bonds; the remainder was sold to nonaffiliates. The bonds mature in 15 years and pay an annual interest rate of 5 percent. Interest is paid semiannually on June 30 and December 31.Based on the information given above, what amount of interest income will Potter Corporation recognize on December 31, 20X5 relative to the interest received on that day, in its separate financial statements?
A. $7,258
B. $3,625
C. $7,224
D. $3,633
Answer: D
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