Mitzi's Muffins Ltd. purchased a commercial baking system for $150,000 at the beginning of 20X1. The estimated economic life of the system is 10 years and Mitzi's uses straight-line amortization. At the beginning of 20X3, Delicious Bakeries Ltd. acquired Mitzi's in a business combination.
-At the time of the acquisition, Mitzi's baking system had a fair value of $140,000 and a remaining useful life of eight years. With respect to the baking system, how much amortization expense should Delicious Bakeries report on its consolidated financial statements at the end of 20X3?

Question

Mitzi's Muffins Ltd. purchased a commercial baking system for $150,000 at the beginning of 20X1. The estimated economic life of the system is 10 years and Mitzi's uses straight-line amortization. At the beginning of 20X3, Delicious Bakeries Ltd. acquired Mitzi's in a business combination. 
-At the time of the acquisition, Mitzi's baking system had a fair value of $140,000 and a remaining useful life of eight years. With respect to the baking system, how much amortization expense should Delicious Bakeries report on its consolidated financial statements at the end of 20X3?

Quizplus · Accepted Answer

The Answer of Mitzi's Muffins Ltd. purchased a commercial baking system for $150,000 at the beginning of 20X1. The estimated economic life of the system is 10 years and Mitzi's uses straight-line amortization. At the beginning of 20X3, Delicious Bakeries Ltd. acquired Mitzi's in a business combination. 
-At the time of the acquisition, Mitzi's baking system had a fair value of $140,000 and a remaining useful life of eight years. With respect to the baking system, how much amortization expense should Delicious Bakeries report on its consolidated financial statements at the end of 20X3?