Photo Finish Corporation Bought a 40% Interest in Click-It Corporation's

Multiple Choice

Photo Finish Corporation bought a 40% interest in Click-It Corporation's $1 par value voting common stock on March 31, 2015. On that date, Click-It paid $20 million for 2 million shares at a $10 market price per share. On December 31, 2015, Click-It paid a $1 million cash dividend declared earlier in 2015, and reported net income for the year ended 2015 of $10 million. On December 31, 2015, Click-It's stock was trading at $11.50 per share. What effect will the dividend have on the Photo Finish financial statements?

A) It would increase cash and increase equity in affiliate earnings.
B) It would increase cash and decrease the investment account.
C) It would increase cash and increase net unrealized gains/losses.
D) It would increase cash and increase the investment account.