Alpha owns 100% of the stock in Omega. On January 1, Year 1, Alpha owns a patent with a cost of $20 million, and accumulated amortization of $5 million. It has 10 more years of expected useful life. Alpha uses the equity method for accounting for investments.

A. What would be the amortization entry that Alpha would make in year 1 and for this patent, if it continues to own it? (1/2 point)

B. Now assume that Alpha sold the patent to Omega on January 1, Year 1, for $18 million. What entry would Alpha, the parent, make to record the sale of the patent? (1/2 point)

C. Who would amortize the patent in Year 1, and what would be the amount of the amortization? (1/2 point)

D. What consolidation entry or entries, if any is needed in Year 1, with regard to this patent? (1 point)

E. Assume Omega continues to own the patent in Year 2. What entry would be needed to adjust the consolidated amortization expense in Year 2? (1/2 point)