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Atlarge Inc

question 10

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, 2011, 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 2011, Ticker earned an income of $108,000 and paid cash dividends of $36,000. Previously in 2010, Ticker had sold inventory costing $28,800 to Atlarge for $48,000. All but 25% of this merchandise was consumed by Atlarge during 2010. The remainder was used during the first few weeks of 2011. Additional sales were made to Atlarge in 2011; inventory costing $33,600 was transferred at a price of $60,000. Of this total, 40% was not consumed until 2012.
-What amount of equity income would Atlarge have recognized in 2011 from its ownership interest in Ticker?

Definitions:

Complex System

A system composed of interconnected parts that as a whole exhibit one or more properties (behavior among the parts) that are not obvious from the properties of the individual parts.

Meaning

The significance, definition, or purpose of something; what is intended to be expressed or indicated.

Organizations

Groups or entities that are structured and managed to meet a particular objective or set of objectives.

Goal Orientation

Refers to an individual's or organization's focus on setting and achieving specific objectives.