Answer:
The total amount of excess amortization for Austin’s 25% investment in Gainsville is $30,000.
Explanation:
total proportions from building, equipment and franchises
= building proportion over 10 years + equipment proportion over 5 years + franchises proportion over 8 years
= ($ 500,000 - $ 400,000)/(10) + (1,300,000 - 1,000,000)/(5) + ($ 400,000-$0)/(8)
= $100,000/10 + $300,000/5 + $400,000/8
= $10,000 + $60,000 + $50,000
=$120,000
Excess Amortization = 25%(total proportions from building, equipment and franchises)
= 25%($120,000)
= $30,000
Therefore, the total amount of excess amortization for Austin’s 25% investment in Gainsville is $30,000.
