Phillips Corporation Purchased 1,000,000 Shares of Martin Corporation's Common Stock

Phillips Corporation purchased 1,000,000 shares of Martin Corporation's common stock, which constitutes 10% of Martin's voting stock on June 30, 2016 for $42 per share. Phillips' intent is to keep these shares beyond the current year. On December 20, 2016, Martin paid a $4,000,000 cash dividend. On December 31, Martin's stock was trading at $45 per share and Martin reported 2016 net income of $52 million. What effect will the dividend have on Phillips' 2016 financial statements?

A) It would increase cash and increase investment income.
B) It would increase cash and decrease investment in associated companies.
C) It would increase cash and increase net unrealized gains/losses.
D) It would increase cash and increase the investment account.