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"Schneider corporation purchased 100 percent of the autstanding stock of Kane, incorporated on January 1, 2005 for $2,590,000. The following information existed for Kane at the acquisition date.

Cash and receivables Book Val$90,000 Market Value$90,000
Inventory Book $210,000 Market $390,000
Plant Assets (net) Book $2,220,000 Value $2,880,000
Current Liabilities Book ($150,000) Market($150,000)
Long Term Debt Book ($620,000) Market($620,000)
Stockholders Equity Book(1,750,000)

At the acquisition date Schneider's assigns a six-month amortization period to the inventory and a five year amortization period to the plant assets.

A. What is the amount of purchased differential amortization included in the calculation of investment income on Schneide's book in 2005 and 2006?

B. What amounts appear on the income statement portion of the 2005 consolidation worksheet with regards to the purchase differential amortization?"

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M988694

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