At the time of acquisition, Mitzi's baking system had a fair value of $140,000. At the end of 20X3, how much amortization expense should Mitzi report?

A) $0
B) $14,000
C) $15,000
D) $17,500

Question

At the time of acquisition, Mitzi's baking system had a fair value of $140,000. At the end of 20X3, how much amortization expense should Mitzi report?A) $0B) $14,000C) $15,000D) $17,500

María Fernanda Pichimata · Accepted Answer

Final Answer : C, Explanation :  Mitzi's Muffins Ltd. uses straight-line amortization. The original cost of the baking system is $150,000 with a 10-year life, resulting in an annual amortization expense of $15,000 ($150,000 / 10 years). The fair value at acquisition does not affect the amortization expense calculation for that year.

At the time of acquisition, Mitzi's baking system had a fair value of $140,000. At the end of 20X3, how much amortization expense should Mitzi report?

A) $0
B) $14,000
C) $15,000
D) $17,500

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