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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...
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?
$9,000
$19,800
$17,000
$21,000
