On january 1, big company acquires all of the common stock of little company by issuing 400,000 shares of $1 par value stock with a market value of $12 per share. little reports earnings of $864,000 and pays dividends of $240,000 in the year of acquisition. the amortization of allocations related to the investment was $48,000. big's net income, not including the investment, was $6,360,000, and it paid dividends of $400,000.what is the amount of consolidated net income? $6,360,000$7,224,000$6,600,000$7,17 6,000$6,552,000

$7,176,000

Explanation:

We will calculate the sbsidiary net gain and add it to the firm income to get the consolidated net income:

Little income                                                864,000

amortization on acquisition investment    (48,000)  

net gain on subsidiary                                816,000

Big income 6,360,000

big income + income from subsidiary = 6,360,000 + 816,000 = 7,176,000

This will be the consolidated net income.

The dividends do not impact the net income.

reducing the scale of the market for a new product.

answer; decentralized;