Arvil Company owns 25% of Zelda Inc. and accounts for the investment using the equity method. During the year, Zelda Inc. reports a net loss of $890,000 and pays total dividends of $41,000.
Which of the following describes the change in Avril’s investment in Zelda during the year?
a. The investment increases by $181,500.
b. The investment decreases by $232,750.
c. The investment decreases by $222,500.
d. The investment decreases by $10,250.
e. None of the above