For 2018, what is the total amount of excess amortization for Austin's 25% investment in Gainsville?

Question

Quizplus · Accepted Answer

The excess amortization is calculated by taking the excess of the purchase price over the book value of the investment and allocating it to goodwill. In this case, Austin's 25% investment in Gainsville was purchased for $500,000, which is $100,000 more than the book value of $400,000 (25% of $1,600,000). The excess amortization is then $100,000/10 years = $10,000 per year. Therefore, the total amount of excess amortization for 2018 (the year in question) would be $10,000 x 3 years = $30,000. Thus, the best choice is C.

For 2018, What Is the Total Amount of Excess Amortization