How much of the acquisition differential was allocated to patents?
P Corp. owns 800 voting common shares out of Q Corp.'s 1,000 outstanding voting common shares, which it accounts for using the equity method. On December 31, 2018, the shareholder's equity section of Q Corp. was comprised of $15,000 in common shares and retained earnings with the amount of $450,000.
Q Corp. reported net Income and paid dividends of $120,000 and $20,000 respectively for the year ended December 31, 2019.
On January 1, 2020, P Corp. sold 200 shares of its investment in Q Corp. for $125,000. On January 1, 2019, the investment account had a balance of $420,000. The acquisition differential was to be allocated as follows:
60% to patents (6 year remaining life).
30% to equipment (9 year remaining life).
A) Nil. B) $6,000. C) $18,000. D) $36,000.
D) $36,000.
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Under the Securities Litigation Reform Act of 1995, companies have a safe harbor for forward-looking statements about the company made by executives
a. True b. False Indicate whether the statement is true or false