Question

In 2017 an investor purchased 40% of a investees equity for 1,100,000 and the excess was a patent with a fair value of 250,000. In 2018 the percentage reduces to 32% due to the investor selling some of its investment. What is the amortization in year 2017 and 2018?

Answer 1

Step-by-step explanation: The amortization expense in 2017 would be $400,000 (40% of $1,100,000). The amortization expense in 2018 would be $320,000 (32% of $1,100,000). This assumes that the patent has a finite useful life and is being amortized over that period.