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CFA Level 2
Financial Reporting and Analysis

Equity Method Investment Income Recognition

Easy Intercorporate Investments Equity Method

ABC Corporation owns 30% of XYZ Limited and has significant influence over its operating and financial policies. ABC Corporation uses the equity method to account for this investment. During the year, XYZ Limited reported net income of $1,000,000 and paid dividends of $200,000. How much should ABC Corporation recognize as its share of XYZ Limited’s net income?

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