QUESTION 4
Betty Inc. owns 30% of the outstanding voting common stock of Linda Co. and has the ability to significantly influence the investee's operations and decision-making. On
January 1, 2018, the balance in the Investment in Linda Co. account was $402,000. Amortization associated with the purchase of this investment is $8,000 per year. During
2018, Linda earned income of $108,000 and paid cash dividends of $36,000. In 2017, Linda had sold inventory costing $33,600 to Betty for $60,000. All but 40% of this
merchandise was consumed by Betty during 2018. The remainder was used during the first few weeks of 2019.
What amount of equity income would Betty have recognized in 2018 from its ownership interest in Ticker?
? $24,400.
? $22,672.
? $21,232.
? $19,792.
? $27,568.