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On April 1, 2021, BigBen Company acquired 30% of the shares of LittleTick, Inc. BigBen...

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Accounting

On April 1, 2021, BigBen Company acquired 30% of the shares of LittleTick, Inc. BigBen paid $146,000 for the investment, which is $52,000 more than 30% of the book value of LittleTick's identifiable net assets. BigBen attributed $14,800 of the $52,000 difference to inventory that will be sold in the remainder of 2021, and the rest to goodwill. LittleTick recognized a total of $16,000 of net income for 2021, and paid total dividends for the year of $10,200; these dividends were issued quarterly. BigBen's investment in LittleTick will affect BigBen's 2021 net income by (Round your answer to nearest whole dollar amount):

Multiple Choice

  • Earnings of $2,520.

  • Earnings of $1,080.

  • A loss of $11,200.

  • Earnings of $3,600.

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