On april 1 2013 bigben company acquired 30 of the shares of, Ask an Expert

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On April 1, 2013, BigBen Company acquired 30% of the shares of LittleTick, Inc. BigBen paid $128,000 for the investment, which is $42,000 more than 30% of the book value of LittleTick's identifiable net assets. BigBen attributed $13,100 of the $42,000 difference to inventory that will be sold in the remainder of 2013, and the rest to goodwill. LittleTick recognized a total of $18,500 of net income for 2013, and paid a total of $11,000 of dividends to shareholders. Assume net income and dividends accrue evenly throughout the year. BigBen's investment in LittleTick will affect BigBen's 2013 net income by (Round your answer to nearest whole dollar amount):

Earnings of $4,163.
Earnings of $2,914.
Earnings of $1,249.
A loss of $8,938.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91226991

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