true
false
because it measures the value of specifically identifiable intangible assets.
EXERCISES
1. Alonzo Co. acquires 3 patents from Shaq Corp. for a total of $360,000. The patents were carried on Shaq’s books as follows: Patent AA: $5,000; Patent BB: $2,000; and Patent CC: $3,000. When Alonzo acquired the patents their fair market values were: Patent AA: $20,000; Patent BB: $240,000; and Patent CC: $60,000. At what amount should Alonzo record Patent BB?
a. $120,000
b. $240,000
c. $2,000
d. $270,000
2..Jeff Corporation purchased a limited-life intangible asset for $120,000 on May 1, 2008. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2010?
a. $ -0-
b. $24,000
c. $32,000
d. $36,000
3. Rich Corporation purchased a limited-life intangible asset for $210,000 on May 1, 2008. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2010?
a. $ -0-.
b. $42,000
c. $56,000
d. $63,000
4.. Thompson Company incurred research and development costs of $100,000 and legal fees of $40,000 to acquire a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Thompson record as Patent Amortization Expense in the first year?
a. $0.
b. $ 4,000.
c. $ 7,000.
d. $14,000.
5. ELO Corporation purchased a patent for $90,000 on September 1, 2008. It had a useful life of 10 years. On January 1, 2010, ELO spent $22,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2010?
a. $20,600.
b. $20,000.
c. $18,800.
d. $15,600.
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