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How will fox net income impact owl books

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Problem 1: Owl Co. purchased 200,000 of the outstanding 1,000,000 shares of Fox Associates. Owl has significant influence over Fox, and Owl will use the appropriate method to account for this investment. Fox declared no dividends but did report Net Income of $750,000 for the year. How will Fox's Net Income impact Owl's books?

Group of answer choices

Option 1: Owl increases the Investment and Income from the Investment accounts by $150,000.

Option 2: Owl increases the Cash and Income from Investment accounts by $150,000.

Option 3: Owl increases the Investment and Cash accounts by $375,000.

Option 4: Owl increases the Cash and decreases the Investment Account accounts by $150,000.

Reference no: EM132670192

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