Answer was D) but I need detailed help with steps as to how :
On January 1, 2010, Cale Corp. paid $1,020,000 to acquire Kaltop Co. Kaltop maintained separate incorporation. Cale used the equity method to account for the investment. The following information is available for Kaltop\'s assets, liabilities, and stockholders\' equity accounts:
Current assets : Book Value : $120,000 Fair Value : $120,000
Land : Book Value : $72,000 Fair Value : $192,000
Building (20 year life ) : Book Value : $240,000 Fair Value : $268,000
Equipment : (10 year life) : Book Value : $540,000 Fair Value : $516,000
Current Liabilities : Book Value : $24,000 Fair Value : $24,000
Long Term Liabilities : Book Value : $120,000 Fair Value : $120,000
Common Stock : Book Value : $228,000
Additional Paid In Capital : Book Value : $384,000
Retained Earnings : Book Value : $216,000
Kaltop earned net income for 2010 of $126,000 and paid dividends of $48,000 during the year
Question : The total 2010 amortization of allocations is calculated to be :
A) 4,000 B) 6,400 C) 2,400 D) (1,000) E) 3,800
Solution
Answer: The total 2010 amortization of allocations is calculated to be :
Amortization value of Building = (268000-240000)/20 year life= 1400
Amortization value of Equipment = (516000-540000)/10 year life= (2400)
Total amortization expense =(2400)+1400=(1000)
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Science 7 - LAND and SEA BREEZE and its Characteristics
Answer was D) but I need detailed help with steps as to how - On Janua.docx
1. Answer was D) but I need detailed help with steps as to how :
On January 1, 2010, Cale Corp. paid $1,020,000 to acquire Kaltop Co. Kaltop maintained
separate incorporation. Cale used the equity method to account for the investment. The following
information is available for Kaltop's assets, liabilities, and stockholders' equity accounts:
Current assets : Book Value : $120,000 Fair Value : $120,000
Land : Book Value : $72,000 Fair Value : $192,000
Building (20 year life ) : Book Value : $240,000 Fair Value : $268,000
Equipment : (10 year life) : Book Value : $540,000 Fair Value : $516,000
Current Liabilities : Book Value : $24,000 Fair Value : $24,000
Long Term Liabilities : Book Value : $120,000 Fair Value : $120,000
Common Stock : Book Value : $228,000
Additional Paid In Capital : Book Value : $384,000
Retained Earnings : Book Value : $216,000
Kaltop earned net income for 2010 of $126,000 and paid dividends of $48,000 during the year
Question : The total 2010 amortization of allocations is calculated to be :
A) 4,000 B) 6,400 C) 2,400 D) (1,000) E) 3,800
Solution
Answer: The total 2010 amortization of allocations is calculated to be :
Amortization value of Building = (268000-240000)/20 year life= 1400
2. Amortization value of Equipment = (516000-540000)/10 year life= (2400)
Total amortization expense =(2400)+1400=(1000)
