On April 1, 2024, BigBen Company acquired 30% of the shares of LittleTick, Incorporated BigBen paid $100,000 for investment, which is $40,000 more than 30% of the book value of LittleTick's identifiable net assets. BigBen attribute $15,000 of the $40,000 difference to inventory that will be sold in the remainder of 2024, and the rest to goodwill. LittleTick recognized a total of $20,000 of net income for 2024, and paid total dividends for the year of $10,000; thes dividends were issued quarterly. BigBen's investment in LittleTick will affect BigBen's 2024 net income by: O a loss of $10,500. O earnings of $4,500. O earnings of $1,125. O earnings of $3,450.

On April 1, 2024, BigBen Company acquired 30% of the shares of LittleTick, Incorporated BigBen paid $100,000 for investment, which is $40,000 more than 30% of the book value of LittleTick's identifiable net assets. BigBen attribute $15,000 of the $40,000 difference to inventory that will be sold in the remainder of 2024, and the rest to goodwill. LittleTick recognized a total of $20,000 of net income for 2024, and paid total dividends for the year of $10,000; thes dividends were issued quarterly. BigBen's investment in LittleTick will affect BigBen's 2024 net income by: O a loss of $10,500. O earnings of $4,500. O earnings of $1,125. O earnings of $3,450.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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On April 1, 2024, BigBen Company acquired 35% of the shares of LittleTick, Incorporated BigBen paid $140,000 for the investment, which is $52,000 more than 35% of the book value of LittleTick's identifiable net assets. BigBen attributed $12,400 of the $52,000 difference to inventory that will be sold in the remainder of 2024, and the rest to goodwill. LittleTick recognized a total of $17,000 of net income for 2024, and paid total dividends for the year of $10,800; these dividends were issued quarterly. BigBen's investment in LittleTick will affect BigBen's 2024 net income by: Note: Round your answer to nearest whole dollar amount. Multiple Choice earnings of $2,901. a loss of $7,938. earnings of $4,463. earnings of $1,562.
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