At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for...
At the start of the current year, SBC Corp. purchased 30% of Sky
Tech Inc. for $45 million. At the time of purchase, the carrying
value of Sky Tech's net assets was $75 million. The fair value of
Sky Tech's depreciable assets was $15 million in excess of their
book value. For this year, Sky Tech reported a net income of $75
million and declared and paid $15 million in dividends.
The total amount of additional depreciation to be recognized by SBC
over the remaining life of the assets is:
-
$4.5 million.
-
$15 million.
-
$27 million.
-
None of these answer choices are correct.
Homework Answers
| Correct option is: $4.5 million | |||
| Workings: | |||
| Amount of depreciation recognized by SBC over the useful life of asset | = | $15 million X 30% | |
| = | 4.5 | million | |
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At the start of the current year, SBC Corp. purchased 30% of Sky
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