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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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