Reference no: EM132782075

Choco Co. acquired 90% of Allie Co. (Allie has total of 100,000 shares outstanding and Choco acquired 90,000 shares) for $810,000 ($9/share) on December 31, 2018. The market value of Allie's stock was $9/share. Choco uses equity method to report its investment in Allie.

12/31/2018	Choco Co.	Allie Co.
	BV	BV	FV
Current assets	$1,368,000	$238,000	$238,000
Equipment [8 years]	164,000	280,000	360,000
Buildinqs 120 years'	274 000	210 000	270 000
Liabilities                                                                             $(546,000)		$(168,000)	$(168,000)
Common stock	(300,000)	(150,000)
Additional paid in capital	(460 000)	(350 000)
Retained earnings [12/31/18]	(500,000)	(60,000)
*note: numbers in this table in 1) refer to credit balance.

During 2019, Allie earned net income of $180,000 and paid dividends of $22,000.

Question a) All excess payment that Choco paid to purchase Allie will be recorded as a patent (NOT goodwill) with useful life of 25 years. Calculate patent and allocated calculated patent between controlling and noncontrolling interest (NCI) on 12/31/2018 (acquisition date)

Question b) Calculate annual amortization excess FV>BV of equipment, building, and patent?