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Acker Inc. bought 40% of Howell Co. on January 1, 2010 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:2010: Cost to Acker: $55,000, Transfer Price:$75,000, Amount held by Howell at year-end: $15,000. 2011:Cost to Acker: $70,000, Transfer Price:$110,000, Amount held by Howell at year-end: $55,000. Howell reported net income of $100,000 in 2010 and $120,000 in 2011 while paying $40,000 in dividends each year.Calculate the Equity in Howell Income that should be reported by Acker in 2010 and 2011?

Acker Inc. bought 40% of Howell Co. on January 1, 2010 for $576,000. The equity method of accounting was used. The book value and fair value of the net assets of Howell on that datewere…