Paranich Co

question 10

Multiple Choice

Paranich Co.acquired Crowley Co.in a business combination at December 31,20X4.Crowley has a capital asset that it has been amortizing at a rate of $10,000 per year.At the time of the acquisition,the asset had a book value of $70,000 and a fair value of $77,000.The asset has a remaining life of 7 years.With respect to this asset,how much amortization expense should Paranich report on its December 31,20X5 consolidated financial statements?

• A)$ 1,000
• B)$ 7,700
• C)$10,000
• D)$11,000

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Definitions:

Items Matching

A fundamental accounting principle that mandates the expenses related to revenue are reported in the same period as the revenue itself.

Classified Balance Sheet

A financial statement that groups a company's assets, liabilities, and equity into categorized sections for clearer analysis.

Permanent Accounts

Accounts that carry their balances over into the next accounting period, typically representing the asset, liability, and equity accounts.

Stockholders' Equity

The remaining value of a company's assets after all its debts have been paid, commonly known as shareholders' equity.