P CorpOwns 800 of Q Corp

question 53

Multiple Choice

P Corp.owns 800 of Q Corp.'s 1,000 outstanding voting common shares which it accounts for using the equity method.On December 31,2009,the shareholder's equity section of Q Corp.was comprised of $15,000 in common stock and retained earnings in the amount of $450,000.
Q Corp.reported net Income and paid dividends of $120,000 and $20,000 respectively for the year ended December 31,2010.
On January 1,2011,P Corp.sold 200 shares of its investment in Q Corp.for $125,000.On January 1,2010,the investment account had a balance of $420,000.The acquisition differential was to be allocated as follows:
60% to patents (6 year remaining life) .
30% to equipment (9 year remaining life) .
-What was the amount of acquisition differential amortization for 2010?

• A)$6,000
• B)$8,000
• C)$12,000
• D)Nil.

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Definitions:

Basic Tendency

An inherent inclination or natural disposition of humans and animals towards certain behaviors or actions.

Reticular Activating System

A network of neurons located in the brainstem that plays a key role in regulating wakefulness, sleep-wake transitions, and attention.

Temperament

The combination of innate traits that subconsciously influence a person's behavior and reactions to their environment.

Sociability

The inherent tendency to seek out or enjoy the company of others.