P Corp Owns 800 Voting Common Shares Out of Q Corp

question 44

Multiple Choice

P Corp. owns 800 voting common shares out of Q Corp.'s 1,000 outstanding voting common shares, which it accounts for using the equity method. On December 31, 2018, the shareholder's equity section of Q Corp. was comprised of $15,000 in common shares and retained earnings with 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, 2019.
On January 1, 2020, P Corp. sold 200 shares of its investment in Q Corp. for $125,000. On January 1, 2019, 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 2019?

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

---

Definitions:

Schema

A cognitive framework or concept that helps organize and interpret information from the world.

Robinson and Swanson

Robinson and Swanson may refer to researchers or a collaborative project, specific details of which would be based on the context in which they are mentioned, as no definitive information is provided.

Distinctively

In a way that is characteristic of a specific person, thing, or group and sets it apart from others.