Please explain

Poster Inc. owns 35 percent of Mayer Corporation. During the calendar year 2015, Mayer had net earnings of $300,000 and paid dividends of $36,000. Poster mistakenly accounted for the investment in Mayer using the cost method rather than the equity method of accounting. What effect would this have on the investment account and net income, respectively? A. Understate, overstate. B. Overstate, understate. C. Overstate, overstate. D. Understate, understate.*