The B&B Company acquired a 25% interest in SS Enterprises for $8,000,000 and appropriately applied the equity method. During the first year, SS reported net income of $1,000,000 and paid cash dividends totaling $100,000.

What amount will B&B Company report regarding its SS Enterprises investment at the end of the first year on its Income Statement?

1. Investment earnings totaling $250,000
2. Investment earnings totaling $265,000
3. Net investment earnings totaling $225,000
4. Dividend income totaling $25,000