The Following Information Pertains to Questions

question 10

Multiple Choice

The following information pertains to questions
On January 1,2009,Hanson Inc.purchased 54,000 of Marvin Inc.'s 90,000 outstanding voting shares for $240,000.On that date,Marvin's common stock and retained earnings were valued at $60,000 and $90,000 respectively.Marvin's book values approximated its fair values on the acquisition date with the exception of the company's equipment,which was estimated to have a fair market value that was $50,000 in excess of its recorded book value.The equipment was estimated to have a useful life of eight years.Both companies use straight line amortization exclusively.
On January 1,2010,Hanson purchased an additional 9,000 shares of Marvin Inc.on the open market for $45,000.On this date,Marvin's book values were equal to its fair market values with the exception of the company's equipment,which is now thought to be undervalued by $60,000.Moreover,the equipment's estimated useful life was revised to 4 years on this date.
Marvin's net Income and dividends for 2009 and 2010 are as follows: Marvin's goodwill was subject to an impairment loss of $5,000 during 2009.Hanson ABC Inc.uses the equity method to account for its investment in Marvin Inc.
-What is the amount of the acquisition differential amortization for 2009?

• A)$6,250
• B)$4,375
• C)$5,625
• D)$12,000

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Definitions:

Menopause

The period in a woman's life, typically occurring between 45 and 55 years of age, marking the end of menstrual cycles and reproductive ability.

Decline

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A steroid hormone that plays a key role in the development of male reproductive tissues as well as promoting secondary sexual characteristics such as increased muscle and bone mass, and the growth of body hair.

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The natural capability to produce offspring, often discussed in the context of individuals, populations, or soil.