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Atlarge Inc

question 52

Multiple Choice

Atlarge Inc. owns 30% of the outstanding voting common stock of Ticker Co. and has the ability to significantly influence the investee's operations and decision making. On January 1, 2013, the balance in the Investment in Ticker Co. account was $402,000. Amortization associated with the purchase of this investment is $8,000 per year. During 2013, Ticker earned income of $108,000 and paid cash dividends of $36,000. Previously in 2012, Ticker had sold inventory costing $28,800 to Atlarge for $48,000. All but 25% of this merchandise was consumed by Atlarge during 2012. The remainder was used during the first few weeks of 2013. Additional sales were made to Atlarge 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 Atlarge have recognized in 2013 from its ownership interest in Ticker?

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Television 1970s

A period marked by significant developments in TV broadcasting, including the expansion of cable television and the emergence of landmark shows and genres.

Dominant Ideologies

The set of beliefs, values, and morals that are widely shared and considered normative within a society, often perpetuated by the media.

United States

A country in North America, consisting of 50 states and a federal district, known for its large economy and cultural influence worldwide.

Outstanding Shares

The total number of shares of a corporation that have been issued and are held by shareholders, including restricted shares owned by company insiders.