P Corp Owns 800 Voting Common Shares Out of Q Corp

question 54

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.
There have been no goodwill impairment losses since acquisition.
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) .
How much of the acquisition differential was allocated to patents on January 1, 2019?

• A) Nil
• B) $6,000
• C) $18,000
• D) $36,000

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Definitions:

Acquisitions Editors

Individuals responsible for discovering and selecting manuscripts or content for publication or production.

Book Manuscripts

The original copies of authors' works before they are published, consisting of the text intended for printing and binding into a book.

Visibility

The degree to which something is seen or recognized in a particular context, often relating to marketing or social presence.

Media Production

The process of creating media content, including planning, filming, editing, and distributing various forms of media such as films, television shows, and online videos.