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HK, Inc., owns 40% of Hannah Corporation. During the calendar year 2018, Hannah had net...

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Accounting

HK, Inc., owns 40% of Hannah Corporation. During the calendar year 2018, Hannah had net earnings of $60,000 and paid dividends of $80,000. HK mistakenly recorded these transactions using the fair value method rather than the equity method of accounting. What effect would this have on the investment account, net income, and retained earnings, respectively? a. Overstate, understate, understate b. Understate, understate, understate c. Understate, overstate, overstate d. overstate, overstate, overstate

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