Ask Question
27 December, 11:06

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:

+5
Answers (1)
  1. 27 December, 14:44
    0
    additional depreciation 4,500,000

    Explanation:

    fair value exceed book value 15,000,000

    SBC proportion of Sky Tech 30%

    addtional depreciation 4,500,000

    Since the company have higher fair value than book value of his asset SBC will proceed to elimintate the difference at year-end when the assets are depreciate.

    For the question given, the information about net income and dividends is irrelevant.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “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 ...” 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