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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:

Erythrocytes

Red blood cells that transport oxygen from the lungs to the body tissues and facilitate carbon dioxide transport back to the lungs.

Carbonic Acid

A weak acid formed in solution when carbon dioxide dissolves in water, playing a critical role in the bloodstream's transport of carbon dioxide.

Plasma

The liquid component of blood in which the blood cells are suspended, consisting of water, salts, proteins, and various other substances.

Bicarbonate Ions

An alkaline ion that plays a crucial role in the body's pH balance and carbon dioxide transport in the blood.