In 2020, Gigajoule Corporation Used the Equity Method to Account

Multiple Choice

In 2020, Gigajoule Corporation used the equity method to account for a 25% ownership interest in Megawatt Corporation. If Megawatt Corporation reports $400,000 of income and pays $80,000 of dividends in 2020, the net effect of the entries made by Gigajoule Corporation in 2020 will be to:

A) reduce the Investment account by $320,000
B) increase the Investment account by $320,000
C) increase the Investment account by $80,000
D) reduce the Investment account by $80,000