At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the time of purchase, the carrying value of Sky Tech's net assets was $80 million. The fair value of Sky Tech's depreciable assets was $20 million in excess of ther book value. For this yeat Sky Tech reported a net income of $80 million and declared and paid $20 milion in dividends. The total amount of additional depreciation to be recognized by SBC over the remaining ife of the assets is: Multiple Choice $6.0 million. $20 million
At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the time of purchase, the carrying value of Sky Tech's net assets was $80 million. The fair value of Sky Tech's depreciable assets was $20 million in excess of ther book value. For this yeat Sky Tech reported a net income of $80 million and declared and paid $20 milion in dividends. The total amount of additional depreciation to be recognized by SBC over the remaining ife of the assets is: Multiple Choice $6.0 million. $20 million
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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Transcribed Image Text:At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the time of purchase, the carrying value of Sky
Tech's net assets was $80 million. The fair value of Sky Tech's depreciable assets was $20 million in excess of their book value. For this yeat,
Sky Tech reported a net income of $80 million and declared and paid S20 million in dividends.
The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is:
Multiple Choice
$6.0 million.
$20 million.
$30 million.
None of these answer choices are correct.
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