On the 2014 consolidation working paper, eliminating entry O increases consolidated operating expenses by
a. $1,600,000
b. $2,100,000
c. $2,900,000
d. $3,200,000
Use the following information to answer questions l - 4 below:
On January l, 2011, Portland Company acquired all of Salem Company's voting stock for $16,000,000 in cash. Some of Salem's assets and liabilities at the date of purchase had fair values that differed from reported values, as follows:

Salem's total stockholders' equity at January 1, 2011, was $4,000,000. It is now December 31, 2014 (four years later). Salem's retained earnings reflect the accumulation of income less dividends; there have been no other changes in its retained earnings. Cumulative goodwill impairment to the beginning of 2014 is $2,000,000. Goodwill impairment for 2014 is $500,000. Portland uses the complete equity method to account for its investment. The December 31,2014, trial balance for Salem appears below.

Book value Fair value Buildings and equipment, net (20 years, straight-line). . . . . . . . . . Identifiable intangibles (5 years, straight-line)**... $11,000,000 0 $3,000,000 10,000,000 Salem Dr (Cr) . 2,500,000 28,000,000 Current assets Liabilities. . 10,000,000) (2,000,000) (14,000,000) 8,000,000 3,500,000 Operating expenses.