P1-23 - 23(Conversion to equity method sale of investment...

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23. (Conversion to equity method, sale of investment, and unrealized gains) Part a Allocation and annual amortization—first purchase Purchase price of 10 percent interest . ...................................... $92,000 Net book value ($800,000 × 10%) . .............................................. (80,000 ) Copyright . .................................................................................... $12,000 Life of copyright . .............................................................................. ÷ 16 years Annual amortization. ........................................................................ $750 Allocation and annual amortization—second purchase Purchase price of 20 percent interest . ...................................... $210,000 Net book value ($800,000 is increased by $180,000 income but decreased by $80,000 in dividend payments) ($900,000 × 20%) . ............................................... (180,000 ) Copyright . .................................................................................... $30,000 Life of copyright . .............................................................................. ÷ 15 years Annual amortization. ........................................................................ $2,000
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P1-23 - 23(Conversion to equity method sale of investment...

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