question 55

Question 55 {3 points} A Inc. owns 30% of the outstanding voting common stock of E Co. and has the ability to signicantly inuence the investee's operations and decision making. [in January 1, 2013, the balance in the Investment in E Co. account was $402,000. Amortization associated with the purchase of this investment is $8,000 per year. During 2013, B earned income of $108,000 and paid cash dividends of $36,000. Previously in 2012, 13 had sold inventory costing $28,000 to A for $48,000. All but 25% of this merchandise was consumed by A during 2012. The remainder was used during the first few weeks of 2013. Additional sales were made to A in 2013; inventory costing $33,600 was transferred at a price of 60,000. Of this total, 40% was not consumed until 2014. What amount of equity income would A have recognized in 2013 from its ownership interest in B