Ask Question
6 January, 13:43

At the start of the current year, SBC Corp. purchased 25% of Sky Tech Inc. for $46 million. At the time of purchase, the carrying value of Sky Tech's net assets was $62 million. The fair value of Sky Tech's depreciable assets was $10 million in excess of their book value. For this year, Sky Tech reported a net income of $62 million and declared and paid $10 million in dividends. The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is: Multiple Choice a. $2.5 million. b. $10 million. c. $18 million. d. None of these answer choices are correct.

+2
Answers (1)
  1. 6 January, 16:29
    0
    total amount of additional depreciation = $2.5 million

    so correct option is a. $2.5 million

    Explanation:

    given data

    purchased 25% = $46 million

    net assets = $62 million

    depreciable assets = $10 million

    net income = $62 million

    dividends = $10 million

    to find out

    total amount of additional depreciation to be recognized by SBC over the remaining life of the assets

    solution

    we get here total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is

    total amount of additional depreciation = $10 million * 25%

    total amount of additional depreciation = $10 million * 0.25

    total amount of additional depreciation = $2.5 million

    so correct option is a. $2.5 million
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “At the start of the current year, SBC Corp. purchased 25% of Sky Tech Inc. for $46 million. At the time of purchase, the carrying value of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers