Multiple Choice
On January 1,20X1,Big Company (Big) bought 30% of the outstanding stock of Little Company (Little) for $110,000 which provided Big with the ability to significantly influence the decisions of Little.Little reported assets of $400,000 and liabilities of $100,000 on that date.As part of its analysis before buying these shares,Big determined that Little owned a patent that had not been recorded despite having a remaining useful life of five years and a value of $20,000.During 20X1,Little reported net income of $70,000 and paid cash dividends of $30,000.What investment income should Big report for 20X1?
A) $9,000
B) $19,800
C) $17,000
D) $21,000
Correct Answer:
Verified
Correct Answer:
Verified
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