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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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 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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