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 Companys 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, but I don't understand why