Question
On April 1, 2021, BigBen Company acquired 30% of the shares of LittleTick, Inc. BigBen paid $146,000 for the investment, which is $52,000 more than
On April 1, 2021, BigBen Company acquired 30% of the shares of LittleTick, Inc. BigBen paid $146,000 for the investment, which is $52,000 more than 30% of the book value of LittleTick's identifiable net assets. BigBen attributed $14,800 of the $52,000 difference to inventory that will be sold in the remainder of 2021, and the rest to goodwill. LittleTick recognized a total of $16,000 of net income for 2021, and paid total dividends for the year of $10,200; these dividends were issued quarterly. BigBen's investment in LittleTick will affect BigBen's 2021 net income by (Round your answer to nearest whole dollar amount):
Multiple Choice
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Earnings of $2,520.
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Earnings of $1,080.
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A loss of $11,200.
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Earnings of $3,600.
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Financial Accounting Text Only
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
5th Edition
0006575404, 978-0006575405
