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What effect would this have on the investment account

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Question - Investor Inc. owns 40 percent of Alimand Corporation. During the calendar year 20X5, Alimand had net earnings of $100,000 and paid dividends of $10,000. During 20X5, the market value of Alimand's stock remained unchanged. Investor mistakenly recorded these transactions by carrying the investment at fair value rather than using the equity method of accounting. What effect would this have on the investment account, net earnings, and retained earnings, respectively?

Overstate, overstate, overstate.

Understate, understate, understate.

Understate, overstate, overstate.

Overstate, understate, understate.

Reference no: EM132626149

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