Figure:
Acker Inc Howell Reported Net Income of $100,000 in 2010 and $120,000

question 28

Multiple Choice

Figure:
Acker Inc. bought 40% of Howell Co. on January 1, 2010 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: $\begin{array}{cccc}\text { Year } & \begin{array}{c}\text { Cost to } \\\text { Acker }\end{array} & \begin{array}{c}\text { Transfer } \\\text { Price }\end{array} & \begin{array}{c}\text { Amount Held by } \\\text { Howell at Year-End }\end{array} \\2010 & \$ 55,000 & \$ 75,000 & \$ 15,000 \\2011 & \$ 70,000 & \$ 110,000 & \$ 55,000\end{array}$ Howell reported net income of $100,000 in 2010 and $120,000 in 2011 while paying $40,000 in dividends each year.
-What is the Equity in Howell Income that should be reported by Acker in 2011?

• A) $32,000.
• B) $41,600.
• C) $48,000.
• D) $49,600.
• E) $50,600.

---

Definitions:

Plato

An ancient Greek philosopher who made foundational contributions to Western philosophy, student of Socrates and teacher of Aristotle.

Process Philosophy

A philosophical approach that emphasizes becoming and change over static being.

Teleological Metaphysics

A philosophical approach that interprets the universe and nature as being purposeful and directed towards certain ends or goals.

Charles Hartshorne

An American philosopher known for his contributions to process theology and the philosophy of religion.