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Friends Corporation purchases an investment in Brothers, Inc. at a purchase price of $9.8 million cash, representing 40% (at book value) of Brothers. During the
Friends Corporation purchases an investment in Brothers, Inc. at a purchase price of $9.8 million cash, representing 40% (at book value) of Brothers. During the year, Brothers reports net income of $1,680,000 and pays $413,000 of cash dividends. At the end of the year, the market value of Friends investment is $11.9 million. What amount of equity earnings would be reported by Friends Corporation?
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