Question
Acker Inc. bought 40% of Howell Co. on January 1, 2020 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, 2020 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:
YEAR/ COST TO ACKER/ TRANSFER PRICE/ AMOUNT HELD BY HOWELL AT YEAR-END:
2020/ $55,000/ $75,000/ $15,000
2021/ $70,000/ $110,000/ $55,000
Howell reported net income of $100,000 in 2020 and $120,000 in 2021 while paying $40,000 in dividends each year.
what is the equity in Howell income that should be reported by Acker in 2021?
options are
$32,000 - $41,600 - $48,000 - $49,600 - $50,600
Acker Inc. bought 40% of Howell Co. on January 1, 2020 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:
YEAR/ COST TO ACKER/ TRANSFER PRICE/ AMOUNT HELD BY HOWELL AT YEAR-END:
2020/ $55,000/ $75,000/ $15,000
2021/ $70,000/ $110,000/ $55,000
Howell reported net income of $100,000 in 2020 and $120,000 in 2021 while paying $40,000 in dividends each year.
what is the equity in Howell income that should be reported by Acker in 2021?
options are
$32,000 - $41,600 - $48,000 - $49,600 - $50,600
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Principles of Accounting
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
12th edition
978-1133603054, 113362698X, 9781285607047, 113360305X, 978-1133626985
