Any excess of cost over fair value was attirbuted to goodwill, which has not been impaired. Emery Co. reported net income of $40
0,000 for 2013, and paid dividends of $200,000 during that year.What is the amount of excess amortization expense for Bailey's investment in Emery for the first year?
1 answer:
Answer:
$84,000
Explanation:
<u>Building</u>
Book value = 1,000,000
Fair value = 1,800,000
Excess amortization = 1,800,000 - 1,000,000 = 800,000
Excess amortization = 800,000 / 20 = 40,000 per year
<u>Equip</u>
Book value = 1,500,000
Fair value = 2,000,000
Excess amortization = 2,000,000 - 1,500,000 = 500,000
Excess amortization = 500,000 / 5 = 100,000 per year
<u>Franchises</u>
Book value = 0
Fair value = 700,000
Excess amortization = 0 - 700,000 = 700,000
Excess amortization = 700,000 / 10 = 70,000 per year
Total Excess Amortization per year = 40,000 + 100,000 + 70,000
Total Excess Amortization per year = 210,000
Bailey corp has 40% shareholding of Emery Co. so it will be divided accordingly
Share of Bailey Corp. = 210,000 x 40% = 84,000
* Original question is also attached as a picture with this answer please find it.
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