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On January 2, 2020 the Investor Company purchased 200 shares of the 1,000 out-standing shares of voting common stock of the Investee Company for $50,000.
On January 2, 2020 the Investor Company purchased 200 shares of the 1,000 out-standing shares of voting common stock of the Investee Company for $50,000. During the year 2020 the Investee Company reported net income of $18,000, and declared and paid dividends amounting to $6,000. Which of the following is NOT a correct statement: * A) If the Investor Company uses the cost method of accounting for its investment in the Investee Company, it will report income (from its investment) of $1,200 during the year 2020 . B) If the Investor Company uses the cost method of accounting for its investment in the Investee Company, it will report an investment value of $50,000 at December 31, 2020. C) If the Investor Company uses the equity method of accounting for its investment in the Investee Company, it will report income from its investment of $3,600 during the year 2020 . D) If the Investor Company uses the equity method of accounting for its investment in the Investee Company, it will report an investment value of $52,400 at December 31, 2020. E) If the Investor Company uses the equity method of accounting for its investment in the Investee Company, its cash flow (i.e., increase or decrease in cash) will be $2,400 greater in the year 2020 than it would be if it had used the cost method
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