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Question
Sports Spectacular purchased 100,000 shares of stock in The Athletic Warehouse for $30 per share. The investment is properly recorded using the equity method. By the end of the year, the stock price has increased to $32 per share. How would the change in stock price affect Sports Spectaculars net income under the equity method?
a. Increase net income by $32,000.
b. Increase net income by $30,000.
c. Increase net income by $2,000.
d. No effect.
Answer
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