On January 1, 2013, Jackie Corp. purchased 30% of the voting common stock of Rob Co., paying $2,000,000. Jackie properly accounts for this investment using the equity method. At the time of the investment, Rob's total stockholders' equity was $3,000,000. Jackie gathered the following information about Rob's assets and liabilities whose book values and fair values differed:

Buildings (15-year life) $1,000,000- BV $1,500,000 - FV

Equipment (5-year life) $2,500,000 - BV $3,000,000 - FV

Franchises (10-year life) $0 - BV $500,000 - FV

1. How much goodwill is associated with this investment? Please show calculation.

2. What is the amount of excess amortization expense for Jackie Corp's investment in Rob Co. for year 2018? Please show calculation.

Answer rating: 100% (QA)

Book value Fair Value Undervalued Overvalued A 1000000 B Buildings Equipment 150000... View the full answer