Mitzi's Muffins Ltd

question 4

Multiple Choice

Mitzi's Muffins Ltd. purchased a commercial baking system for $150,000 at the beginning of 20X1. The estimated economic life of the system is 10 years and Mitzi's uses straight-line amortization. At the beginning of 20X3, Delicious Bakeries Ltd. acquired Mitzi's in a business combination.
-At the time of acquisition, Mitzi's baking system had a fair value of $140,000. At the end of 20X3, how much amortization expense should Mitzi report?

• A)$0
• B)$14,000
• C)$15,000
• D)$17,500

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Definitions:

Meteorite

A fragment of a meteoroid that has fallen to a planetary surface.

Dried Up

Refers to something that has lost all its moisture.

Natural Stain

A discoloration or marking often found on materials, caused by the chemical or physical reaction of a natural substance.

Fractures

Breaks or cracks in rocks where there has been no significant movement or displacement of the sides relative to one another.