Question 27 (1 point) Hope Company bought 30% of Faith Corporation in the beginning of 2018. Hope's purchase price equaled 30% of the book value of Faith's net identifiable assets, which also equaled 30% of the fair value of Faith. During 2018, Faith reported net income in the amount of $4,000,000 and declared and paid dividends in the amount of $500,000. Hope mistakenly accounted for the investment using the fair value through net income method instead of using the equity method. What effect would this error have on the investment account and net income, respectively, for 2018? Overstated by $1,050,000; understated by $1,050,000. Understated by $1,050,000; understated by $1,050,000. Understated by $1,200,000; overstated by $1,050,000. Overstated by $1.200,000; overstated by $1.200.000 Question 28 (1 point) If Pop Company owns 15% of the common stock of Son Company, then Pop Company typically: Would record 15% of the net income of Son Company as investment income each year. Would record dividends received from Son Company as investment revenue. Would increase its investment account by 15% of Son Company income each year. All of these answer choices are correct. Question 29 (1 point) If an available for sale investment is sold for which there are unrealized holding gains in accumulated other comprehensive income (AOCI), a reclassification adjustment affects other comprehensive income (OCI) in the period of sale by Reducing OC for the amount of unrealized holding gains in AOCI. Increasing OCI for the amount of unrealized holding gains in AOCI No effect on OCI, as OCI only includes the effects of unrealized holding sains and losses. No effect on OCI, as the realized gain is included in AOCI