Reference no: EM132588311

On January 1, 2018, Hanson Inc. purchased 54,000 voting shares out of Marvin Inc.'s 90,000 outstanding voting shares for $240,000. On that date, Marvin's common shares and retained earnings were valued at $60,000 and $90,000, respectively. Marvin's book values approximated its fair values on the acquisition date with the exception of the company's equipment, which was estimated to have a fair value that was $50,000 in excess of its recorded book value. The equipment was estimated to have a useful life of eight years. Both companies use straight line amortization exclusively.

On January 1, 2019, Hanson purchased an additional 9,000 shares of Marvin Inc. on the open market for $45,000.

Marvin's net income and dividends for 2018 and 2019 are as follows respectively:

                                            2018                2019

Net Income                   $60,000        $80,000

Dividends                        $9,000          $14,000

Marvin's goodwill suffered an impairment loss of $5,000 during 2018. Hanson Inc. uses the equity method to account for its investment in Marvin Inc.

Problem 1: What is the amount of the acquisition differential amortization for 2018 (excluding goodwill impairment)?

Problem 2: What is the amount of goodwill arising from Hanson's January 1, 2018 acquisition?

Problem 3: What would be the amount of the unamortized acquisition differential (excluding goodwill) at the end of 2019?

Problem 4: What is the amount of the acquisition differential amortization (excluding goodwill impairment) for 2019?