On 4/1/11, Sey Mold Corporation Acquired 100% of DotDot

question 112

Essay

On 4/1/11, Sey Mold Corporation acquired 100% of DotDot.Com for $2,000,000 cash. On the date of acquisition, DotDot's net book value was $900,000. DotDot's assets included land that was undervalued by $300,000, a building that was undervalued by $400,000, and equipment that was overvalued by $50,000. The building had a remaining useful life of 8 years and the equipment had a remaining useful life of 4 years. Any excess fair value over consideration transferred is allocated to an undervalued patent and is amortized over 5 years.
Determine the amortization expense related to the combination at the year-end date of 12/31/11.

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Definitions:

In Phase

A condition that occurs when voltage and current reach all peak values at the same time.

Out of Phase

A condition where two waveforms of the same frequency are not aligned in time, resulting in a phase difference.

Leading Phase

A condition in an AC circuit where the voltage wave is ahead of the current wave in time, indicating capacitive properties.

Skin Effect

The tendency of an alternating electrical current to become distributed within a conductor such that the current density is largest near the surface of the conductor, and decreases with greater depths in the conductor.