What is the amount of acquisition differential to be amortized during 2010?

Question

Quizplus · Accepted Answer

The amount of acquisition differential to be amortized during 2010 can be calculated as follows:
Acquisition differential = Fair value of net assets acquired - Purchase price
= ($315,000 - $280,000) - $20,000
= $15,000
Amortization of acquisition differential = Acquisition differential / Amortization period
= $15,000 / 5 years
= $3,000 per year
Since the acquisition occurred in 2008, the amortization for 2010 would be for the third year, which is:
$3,000 x 3 years = $9,000
However, we are told that $800 of the acquisition differential was already amortized in 2009, so the amount to be amortized in 2010 is:
$9,000 - $800 = $8,200
Rounded to the nearest hundred, this gives us an answer of:
$8,200 ≈ $8,800, which is answer choice B.

What Is the Amount of Acquisition Differential to Be Amortized