Kross Company purchases an equity investment in Penno Company at a purchase price of ($ 5) million,

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Kross Company purchases an equity investment in Penno Company at a purchase price of $\$ 5$ million, representing $40 \%$ of the book value of Penno. During the current year, Penno reports net income of $\$ 600,000$ and pays cash dividends of $\$ 200,000$. At the end of the year, the fair value of Kross's investment is $\$ 5.3$ million. What amount of income does Kross report relating to this investment in Penno for the year? Explain.

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