3. During 2016, Pop Corporation reported $120,000 investment income from Son Corporation, its 30 percent–owned investee, and it received $60,000 dividends from Son. Pop’s effective income tax rate is 34 percent, and it is entitled to an 80 percent dividends-received deduction on dividends received from Son. On the basis of this information, Pop should:

a Report investment income from Son of $115,920 b Increase its investment in Son for 2016 in the amount of $55,920 c Credit its deferred tax liability in the net amount of $4,080 for 2016 d Debit its deferred tax liability in the net amount of $4,080 for 2016