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CFR, Inc. purchased a 10% interest in The Candy Company on January 2, 2013. The purchase price was $400,000. CFR's officers constitute a majority of
CFR, Inc. purchased a 10% interest in The Candy Company on January 2, 2013. The purchase price was $400,000. CFR's officers constitute a majority of The Candy Company's board of directors. The investee reported net income of $500,000 and paid dividends of $150,000 in 2013. On the December 31, 2013, balance sheet, what amount should CFR report as Equity Investment in The Candy Company?
a) $900,000
b) $870,000
c) $800,000
d) $830,000
The answer is b - can someone please explain the calculations to get to this answer? Thanks.
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