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Primo Company acquired all of the stock of Star Company on January 1, 2020 for $1,100,000 cash. There were no combination or stock issuance costs.

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Primo Company acquired all of the stock of Star Company on January 1, 2020 for $1,100,000 cash. There were no combination or stock issuance costs. Fair market value differed from book value for two items: item book value fair value Land $105,000 $165,000 Buildings (20 year life) $120,000 $180,000 In 2020, Star Company reported income of $20,000 and paid dividends of $7,000 a. Calculate the annual amortization of any difference between fair market value and Star's book values b. Then, indicate how much investment income Primo Company would recognize in 2020 under each of the following methods: Initial Value Method Partial Equity Method Equity Method

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