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On January 1, 2020, Yellow Corporation acquired 25 percent of the outstanding shares of Green Company for $100,000 cash. Green Company reported net income of
On January 1, 2020, Yellow Corporation acquired 25 percent of the outstanding shares of Green Company for $100,000 cash. Green Company reported net income of $40,000 and paid dividends of $30,000 for both 2020 and 2021. The fair value of Green Company shares held by Yellow was $110,000 and $112,000 on December 31, 2020 and 2021 respectively. Assume in this situation, Yellow could not exercise significant influence over the investee. By what amount will Yellow's 2021 income change due to its investment in Green? $7,500 increase in income 0 $2,000 increase in income $9,500 increase in income O None of the answer choices is correct
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