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Kat Inc. holds 75% of the outstanding common stock of Rax Corp. Rax currently owes Kat $500,000 for inventory acquired over the past few months.

Kat Inc. holds 75% of the outstanding common stock of Rax Corp. Rax currently owes Kat $500,000 for inventory acquired over the past few months. In preparing consolidated financial statements, what amount of this debt should be eliminated?

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