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Company ABC purchased 100% of the outstanding common stock of Company XYZ on 1/1/19 for $600,000 in cash and stock. Company ABC accounts for the
Company ABC purchased 100% of the outstanding common stock of Company XYZ on 1/1/19 for $600,000 in cash and stock. Company ABC accounts for the income of Company XYZ using the Cost Method, and during the year Company XYZ reported Net Income of $350,000 and declared and paid dividends of $100,000. Assuming no other transaction between the two companies, the balance in the Investment Income from Company XYZ on the books of Company ABC on 12/31/19 will be:
a) $60,000
b) $0
c) $40,000
d) $100,000
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