Compute the AAP amortization

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Reference no: EM132220996

Question - Molina Company acquires 100% of the stock of Hitachi Corporation on January 1, 2016, for $2,280,000 cash. As of that date Santiago had the following account balances:

	Book Value		Fair value
Cash	$220,000		$220,000
Accounts receivable	360,000		360,000
Inventory	480,000		$ 540,000
Building-net (10 year life)	900,000		720,000
Equipment-net (5 year life)	600,000		750,000
Land	540,000		780,000
Accounts Payable	240,000		240,000
Bonds Payable ($500,000 face value)	1,000,000	(Due 12/31/19)	1,020,000
Common stock	600,000
Additional paid-in capital	360,000
Retained earnings	900,000

In 2016 and 2017, Hitachi had net income of $100,000 and 108,000, respectively. In addition, Hitachi paid dividends of $27,000 in both years. Inventory is assumed to be sold in 2016.

1. Compute the AAP amortization for 2016.

a. $67,000

b. $53,000

c. $ 7,000

d. $77,000

Reference no: EM132220996

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