Highlight, Inc., owns all outstanding stock of Kiort Corporation. The two companies report the following balances for the year ending December 31,2013:
| Highlight | Kiort |
Revenues and interest income. | $(670,000) | $(390,000) |
Operating and interest expense | 540,000 | 221,000 |
Other gains and losses | (120,000) | (32,000) |
Net income | $(250,000) | $(201,000) |
On January 1,2013, Highlight acquired on the open market bonds for $108,000 originally issued by Kiort. This investment had an effective rate of 8 percent. The bonds had a face value of $100,000 and a cash interest rate of 9 percent. At the date of acquisition, these bonds were shown as liabilities by Kiort with a book value of $84,000 (based on an effective rate of 11 percent). Determine the balances that should appear on a consolidated income statement for 2013.
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