On January 1, Big Company acquires all of the common stock of Little Company by issuing 400,000 shares of $1 par value stock with a market value of $12 per share. Little reports earnings of $864,000 and pays dividends of $240,000 in the year of acquisition. The amortization of allocations related to the investment was $48,000. Big's net income, not including the investment, was $6,360,000, and it paid dividends of $400,000 On the consolidated financial statements, what amount is reported for Equity in Little Company's Earnings? Multiple Choice $240,000 $1.056,000 $816,000 $864,000
On January 1, Big Company acquires all of the common stock of Little Company by issuing 400,000 shares of $1 par value stock with a market value of $12 per share. Little reports earnings of $864,000 and pays dividends of $240,000 in the year of acquisition. The amortization of allocations related to the investment was $48,000. Big's net income, not including the investment, was $6,360,000, and it paid dividends of $400,000 On the consolidated financial statements, what amount is reported for Equity in Little Company's Earnings? Multiple Choice $240,000 $1.056,000 $816,000 $864,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, Big Company acquires all of the common stock of Little Company by issuing 400,000 shares of $1 par value stock with a market
value of $12 per share. Little reports earnings of $864,000 and pays dividends of $240,000 in the year of acquisition. The amortization of
allocations related to the investment was $48,000. Big's net income, not including the investment, was $6,360,000, and it paid dividends of
$400,000.
On the consolidated financial statements, what amount is reported for Equity in Little Company's Earnings?
Multiple Choice
$240,000
$1.056,00
$816,000
$864,000
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