On January $1,$ Year $1,$ Company A purchased $25\%$ of Company B$\text{'}$s $100,000$ outstanding shares of common stock for $$10$ per share. Company A applies the equity method for its investment in Company B$.$ Company B reported a net profit of $$400,000$ for Year $1.$

For each of the following independent situations that occurred during Year $2,$ select the Year $2$ effect on the carrying amount of Company A$\text{'}$s investment in Company B$.$ Each choice may be used once, more than once, or not at all.

Group of answer choices

$1.$ On December $1,$ Year $2,$ Company B declared and paid a dividend of $$1$ per share.

Decrease

$2.$ The market price of one share of company B$\text{'}$s common stock on December $31,$ Year $2,$ is $$27.$

Increase

$3.$ Company B reported a net profit of $$50,000$ for Year $2.$

Increase

$4.$ On December $15,$ Year $2,$ Company B declared a dividend of $$1$ per share. The dividend will be paid on January $31,$ Year $3.$

Decrease

$5.$ On November $30,$ Year $2,$ Company B sold inventory to Company A for $$29,000.$ The cost of this inventory was $$25,000.$ Company A sold this inventory to third parties during Year $3.$

Decrease