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On January 1, 20X9, Timber Company acquired 25% of Johnson Company's common stock at underlying book value of $200,000. Johnson reported net income of $270,000
On January 1, 20X9, Timber Company acquired 25% of Johnson Company's common stock at underlying book value of $200,000. Johnson reported net income of $270,000 for 20X9 and paid total dividends of $140,000. Timber uses the equity method to account for this investment.
What amount of investment income will Timber Company report its investment in Johnson for the year?
A. $140,000
B. $67,500
C. $55,500
D. $35,000
*Please show your computations for the answer.
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