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Acker Inc. bought 40% of Howell Co. on January 1, 2017 for $576,000. The equity method of accounting was used. The book value and fair

Acker Inc. bought 40% of Howell Co. on January 1, 2017 for $576,000. The equity method of accounting was used. The book value and fair value of the net assets of Howell on that date were $1,440,000. Acker began supplying inventory to Howell as follows:

Cost to Acker Transfer Price Amount Held by Howell at Year-End
2017 $ 55,000 $ 75,000 $15,000
2018 $ 70,000 $ 110,000 $55,000

Howell reported net income of $100,000 in 2017 and $120,000 in 2018 while paying $40,000 in dividends each year.

What is the Equity in Howell Income that should be reported by Acker in 2017?

Multiple Choice

A $10,000.

B $24,000.

C $36,000.

D $38,400.

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