On 4/1/09, Sey Mold Corporation Acquired 100% of DotDot

question 71

Essay

On 4/1/09, 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 12/31/09.

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Definitions:

Collective Bargaining

Collective bargaining is the process of negotiation between employers and a group of employees aimed at reaching agreements to regulate working conditions, wages, and other aspects of workers' compensation and rights.

Labor Unions

Organizations formed by workers in various sectors to protect and advance their rights, wages, and working conditions through collective bargaining.

Labor Contract

A written agreement between an employee or group of employees and an employer, detailing the terms and conditions of employment.