BUS 203 - Review 4. P Company invests $100,000 in s Company and subsequently owns 15% of S Company's common stock. As a result, P Company classifies the investment in stock using the Fair Value Method of accounting for its investment. During the year, S Company reports income of $30,000 and pays dividends of $20,000. The market value of S Company at year-end is $85,000. P Company has no other investments in common stock. What effect would these transactions have on P Company's account - Investment in Common Stock - S Company? a) The balance in the account would increase by $1,500. b) The balance in the account would decrease by $3,000. C) There would be no effect on the account because P Company uses the Fair Value method of accounting for its long-term investments d) The balance should be reduced by $15,000 by means of an adjustment account. Assuming the same facts in number 4, what effect would these transactions have on P Company's account - Investment in Common Stock - S Company, if P Company used the Equity method of Accounting? a) The balance in the account would increase by $1,500. b) The balance in the account would decrease by $3,000. c) There would be no effect on the account because P Company uses the Cost method of accounting for its long-term investments. d) The balance should be reduced by $15,000 by means of an adjustment account