Nuworth Co

Multiple Choice

Nuworth Co. acquired Wellam Co. in a business combination at December 31, 2012. Wellam has a capital asset that it has been amortizing at a rate of $20,000 per year. At the time of the acquisition, the asset had a book value of $140,000 and a fair value of $154,000. The asset has a remaining life of 7 years. With respect to this asset, how much amortization expense should Nuworth report on its December 31, 2013 consolidated financial statements?

A) $ 2,000
B) $ 5,400
C) $20,000
D) $22,000