Acker Inc. bought 40% of Howell Co. on January 1, 2012 for $576,000. The equity method of accounting was used. The book value and fair value of the net assets of Howell on that date were $1,440,000. Acker began supplying inventory to Howell as follows: Picture Howell reported net income of $100,000 in 2012 and $120,000 in 2013 while paying $40,000 in dividends each year. What is the balance in Acker's Investment in Howell account at December 31, 2012?

a) $616,000.

b) $606,000.

c) $598,400.

d) $614,400.

e) $576,000.

Answer rating: 100% (QA)

EXPLANATION Initial investment 5 7 View the full answer