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Hood Corporation owns a 80% interest in River Company, acquired several years ago at a cost equal to book value and fair value.

  1. Hood Corporation owns a 80% interest in River Company, acquired several years ago at a cost equal to book value and fair value. River sells merchandise to Hood for the first time in 2017, and some is unsold at December 31, 2017. In computing income from the investee for 2017 under the equity method, Hood uses which equation?


A. 80% of River's income less 100% of the unrealized profit in Hood's ending inventory

B. 80% of River's income plus 100% of the unrealized profit in Hood's ending inventory

C. 80% of River's income less 80% of the unrealized profit in Hood's ending inventory

D. 80% of River's income plus 80% of the unrealized profit in Hood's ending inventory

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