DC Company purchased 100% of the outstanding common shares of FA Company on December 31, 20X3 for $570,000. At that date, FA had $260,000 of outstanding common stock and retained earnings of $200,000. It was agreed that the net assets were fairly valued except that the fair value of the capital assets exceeded their net book value by $36,000 and the carrying value of the inventory exceeded its fair value by $24,000. The capital assets had a remaining useful life of 6 years as of the acquisition date and have no salvage value. Inventory turns over 2 times a year. In the FMV increment amortization elimination entries for the year ended December 31, 20x4, what is the dollar value of the adjustment that should be made to amortization expense for the difference in the capital asset valuation?
DC Company purchased 100% of the outstanding common shares of FA Company on December 31, 20X3 for $570,000. At that date, FA had $260,000 of outstanding common stock and retained earnings of $200,000. It was agreed that the net assets were fairly valued except that the fair value of the capital assets exceeded their net book value by $36,000 and the carrying value of the inventory exceeded its fair value by $24,000. The capital assets had a remaining useful life of 6 years as of the acquisition date and have no salvage value. Inventory turns over 2 times a year. In the FMV increment amortization elimination entries for the year ended December 31, 20x4, what is the dollar value of the adjustment that should be made to amortization expense for the difference in the capital asset valuation?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![DC Company purchased 100% of the outstanding common shares of FA Company on
December 31, 20X3 for $570,000. At that date, FA had $260,000 of outstanding
common stock and retained earnings of $200,000. It was agreed that the net assets
were fairly valued except that the fair value of the capital assets exceeded their net
book value by $36,000 and the carrying value of the inventory exceeded its fair value
by $24,000. The capital assets had a remaining useful life of 6 years as of the
acquisition date and have no salvage value. Inventory turns over 2 times a year. In
the FMV increment amortization elimination entries for the year ended December
31, 20x4, what is the dollar value of the adjustment that should be made to
amortization expense for the difference in the capital asset valuation?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc147f606-c205-4a84-bfa5-c0cc221b9f28%2F97bbb95e-f64a-414b-8096-a0c1f19868ae%2F80gx4oy_processed.jpeg&w=3840&q=75)
Transcribed Image Text:DC Company purchased 100% of the outstanding common shares of FA Company on
December 31, 20X3 for $570,000. At that date, FA had $260,000 of outstanding
common stock and retained earnings of $200,000. It was agreed that the net assets
were fairly valued except that the fair value of the capital assets exceeded their net
book value by $36,000 and the carrying value of the inventory exceeded its fair value
by $24,000. The capital assets had a remaining useful life of 6 years as of the
acquisition date and have no salvage value. Inventory turns over 2 times a year. In
the FMV increment amortization elimination entries for the year ended December
31, 20x4, what is the dollar value of the adjustment that should be made to
amortization expense for the difference in the capital asset valuation?
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