The Following Information Pertains to Questions

question 13

Multiple Choice

The following information pertains to questions
Whine purchased 80% of the outstanding voting shares of Dine Inc.on December 31,2009.The Balance Sheets of both companies on that date are shown below: Chompster Inc. ,one of Whine's main competitors has agreed to acquire an equity interest in Dine Inc.As a result of the agreement,Dine Inc.would issue another 8,000 shares (over and above the 32,000 shares it currently has outstanding) to Chompster for $20 per share.
The acquisition differential on the date of acquisition was attributed entirely to equipment which had a remaining useful life of ten years from the date of acquisition.
Whine Inc.uses the equity method to account for its investment in Dine Inc.There were no unrealized intercompany profits on December 31,2009.
-What would be the amount of the unamortized acquisition differential on December 31,2009?

• A)$40,000
• B)$125,000
• C)$50,000
• D)$80,000

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a dataset, often used in inventory valuation.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Current Liabilities

Current liabilities are financial obligations a company is expected to pay within one year.

Short-term Investments

Short-term investments are financial assets that a company plans to convert into cash typically within a year, such as stocks or government bonds.