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?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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
о
о
$1,056,000
$864,000
$816,000
$240,000
Transcribed Image Text:Multiple Choice о о $1,056,000 $864,000 $816,000 $240,000
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