On January 1, 2022, Integrity Co. purchased 100% of Accountability's common stocks for $720,000. On that date, Accountability had paid-in capital of $100,000 and retained earnings of $420,000. Equipment and land were each undervalued by $50,000 on Accountabilitys books. The equipment has a remaining useful life of five years. Accountability reported Net Income $68,000 and paid dividends $23,000 during 2022. There were no other intercompany transactions between Integrity and Accountability.

Integrity uses the Equity Method to account for its investment in Accountability. Which of the following is correct?

Integrity's Equity Income on its investment in Accountability was $35,000 in 2022.

Integrity's Equity Income on its investment in Accountability was $68,000 2022.

Integrity's Equity Income on its investment in Accountability was $23,000 in 2022.

Integrity's Equity Income on its investment in Accountability was $58,000 in 2022.