Acker Inc Bought 40% of Howell Co

question 24

Multiple Choice

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: 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 2020?

• A)$10,000.
• B)$24,000.
• C)$36,000.
• D)$38,400.
• E)$40,000.

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