On January 1,2011,Paste Unlimited,a U

question 38

Essay

On January 1,2011,Paste Unlimited,a U.S.company,acquired 100% of Sticky Corporation of Italy,paying an excess of 112,500 euros over the book value of Sticky's net assets.The excess was allocated to undervalued equipment with a five year remaining useful life.Sticky's functional currency is the euro,and the books are kept in euros.Exchange rates for the euro for 2011 are:
Required:
1.Determine the depreciation expense on the excess allocated to equipment for 2011 in U.S.dollars.
2.Determine the unamortized excess allocated to equipment on December 31,2011 in U.S.dollars.
3.If Sticky's functional currency was the U.S.dollar,what would be the depreciation expense on the excess allocated to the equipment for 2011?

---

Definitions:

Sales

Transactions involving the exchange of goods or services for money or other compensation.

Certain Carrying Charges

Expenses necessary for holding or maintaining property, which may be deductible for tax purposes.

State Income Tax Refund

State income tax refund is the money returned to a taxpayer from the state government if they overpaid their state income taxes.

1099-G

A tax form used in the United States to report certain government payments, like state tax refunds.