Amount of purchased differential amortization

Assignment Help Accounting Basics

Reference no: EM13143733

Schneider corporation purchased 100 percent of the autstanding stock of Kane, incorporated on January 1, 2005 for $2,590,000. The following information existed for Kane at the acquisition date.

Book Value Market Value
Cash and receivables $ 90,000 $ 90,000
Inventory 210,000 390,000
Plant Assets (net) 2,220,000 2,880,000
Current Liabilities (150,000) (150,000)
Long Term Debt (620,000) (620,000)
Stockholders Equity (1,750,000)

At the acquisition date Schneider's assigns a six-month amortization period to the inventory and a five year amortization period to the plant assets.

A. What is the amount of purchased differential amortization included in the calculation of investment income on Schneide's book in 2005 and 2006?

B. What amounts appear on the income statement portion of the 2005 consolidation worksheet with regards to the purchase differential amortization?

Reference no: EM13143733

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