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Meyer Company purchased 100 shares of the Smith Company at their carrying amount. During the next year, Smith earned $1.25 per share and paid a

Meyer Company purchased 100 shares of the Smith Company at their carrying amount. During the next year, Smith earned $1.25 per share and paid a $2.00 per share dividend. If Meyer did not elect the fair value option but can exercise significant influence over Smith, it should

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Reduce the carrying amount of its investment in Smith Co. by $2.00 per share under the fair-value method.

Reduce the carrying amount of its investment in Smith Co. by $.75 per share.

Increase the carrying amount of its investment in Smith Co. by $3.25 per share.

Not adjust the carrying amount of its investment in Smith Co. if the equity method is used.

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