Reference no: EM131745578

On April 1, 2008, Gator Corp. purchased 30% of the voting common stock of Vol Co., paying $2,400,000. Gator used the equity method to account for this investment.

At the time of the investment, Vol Co.'s total stockholders' equity was $6,000,000. Vol Co. had franchise agreements with a fair market value of $400,000.

Gator gathered the following information about Vol Co's assets and liabilities:

Vol Co was carrying Buildings on their books with a remaining useful life of 10 years, a book value of $300,000, and a fair value of $500,000.

Vol Co was also carrying Equipment with a remaining useful life of 5 years, a book value of $1,200,000, and a fair value of $1,300,000. For all of Vol Co's other assets and liabilities, book value = fair value.

Assuming that the franchise agreements are amortized over a period of four years, what is the total amortization related to this investment for 2008?

$31,500
$26,250
$35,000
$36,750
$0