Question: a company using the equity method for its investment in a 30% owed invested, which earned $40,000 and paid $10,000 in dividends, made the following

a company using the equity method for its investment in a 30% owed invested, which earned $40,000 and paid $10,000 in dividends, made the following two entries

Investment in investee 12,000 Cash 3,000

Income from investee 12,000 dividend revenue 3,000

which of the following is true

A- investment in the investee will be understated and retained earnings will be overstated

B- investment in the investee will be overstated and retained earnings will be overstated

c- investment in the investee will be overstated and retained earnings will be understated

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