REFERENCE: Ref 01_01 On January 3,2008,Austin Corp.purchased 25% of the Voting Common Stock

REFERENCE: Ref 01_01
On January 3,2008,Austin Corp.purchased 25% of the voting common stock of Gainsville Co. ,paying $2,500,000.Austin decided to use the equity method to account for this investment.At the time of the investment,Gainsville's total stockholders' equity was $8,000,000.Austin gathered the following information about Gainsville's assets and liabilities:
SHAPE \* MERGEFORMAT
For all other assets and liabilities,book value and fair value were equal.Any excess of cost over fair value was attributed to goodwill,which has not been impaired.
-For 2008,what is the total amount of excess amortization for Austin's 25% investment in Gainsville?

A) $27,500.
B) $20,000.
C) $30,000.
D) $120,000.
E) $70,000.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free