REFERENCE: Ref.07_07
On January 1,2009,Jones Company bought 15% of Whitton Company.Jones paid $150,000 for these shares,an amount that exactly equaled the proportionate book value of Whitton.On January 1,2010,Whitton acquired 80% ownership of Jones.The following data are available concerning Whitton's acquisition of Jones:
Consideration transferred for 80% interest,January 1,2010: $800,000
Jones' reported book value,January 1,2010: 900,000
Excess fair value over book value (assigned to trademarks)is amortized over 20 years.
The initial value method is being used.
The following information is available regarding Jones and Whitton: I can't edit picture.The year 2006 s/be 2009.The year 2007 s/be 2010.
I can't access the art to remove italics.Let it go.
Should the titles be italicized?
-Compute the amount allocated to trademarks recognized in the January 1,2010 consolidated balance sheet.

Question

REFERENCE: Ref.07_07
On January 1,2009,Jones Company bought 15% of Whitton Company.Jones paid $150,000 for these shares,an amount that exactly equaled the proportionate book value of Whitton.On January 1,2010,Whitton acquired 80% ownership of Jones.The following data are available concerning Whitton's acquisition of Jones:
Consideration transferred for 80% interest,January 1,2010: $800,000
Jones' reported book value,January 1,2010: 900,000
Excess fair value over book value (assigned to trademarks)is amortized over 20 years.
The initial value method is being used.
The following information is available regarding Jones and Whitton:  I can't edit picture.The year 2006 s/be 2009.The year 2007 s/be 2010.
I can't access the art to remove italics.Let it go.
Should the titles be italicized?
-Compute the amount allocated to trademarks recognized in the January 1,2010 consolidated balance sheet.

Quizplus · Accepted Answer

To compute the amount allocated to trademarks recognized in the January 1, 2010 consolidated balance sheet, we first need to determine the fair value of Jones as of January 1, 2010. Since Jones' reported book value on that date was $900,000 and Whitton acquired an 80% interest for $800,000, the fair value of Jones can be estimated to be $1,125,000 ($900,000/80% x 100%). 
Next, we need to calculate the excess fair value over the book value of Jones, which is $225,000 ($1,125,000 - $900,000). This excess fair value is assigned to trademarks and is amortized over 20 years. Therefore, the amount allocated to trademarks recognized in the January 1, 2010 consolidated balance sheet is $100,000 ($225,000/20). 
Thus, the correct answer is B.

REFERENCE: Ref.07_07 On January 1,2009,Jones Company Bought 15% of Whitton Company.Jones Paid