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Question(s) / Instruction(s):

An investor uses the equity method to account for investments in common stock. The purchase price implies a fair value of the investees depreciable assets in excess of the investees net asset carrying values. The investors amortization of the excess:

a. Decreases the investment account.

b. Decreases the goodwill account.

c. Increases the investment revenue account.

d. Does not affect the investment account.

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