On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $4 million, patent; $3 million, developed technology; $2 million, in-process research and development; $5 million, goodwill. Lexiconâ€™s policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life. What is the total amount of expenses (ignoring taxes) that would appear in Lexiconâ€™s income statement for the year ended December 31 related to these items?

On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $4 million, patent; $3 million, developed technology; $2 million, in-process research and development; $5 million, goodwill. Lexiconâ€™s policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life. What is the total amount of expenses (ignoring taxes) that would appear in Lexiconâ€™s income statement for the year ended December 31 related to these items?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 75P

See similar textbooks

Similar questions

On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $4 million, patent; $3 million, developed technology; $2 million, inprocess research and development; $5 million, goodwill. Lexicon’s policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life. What is the total amount of expenses (ignoring taxes) that would appear in Lexicon’s income statement for the year ended December 31 related to these items?
On June 28, Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $5.2 million, patent; $4.2 million, developed technology; $3.2 million, indefinite-life trademark; $6.2 million, goodwill. Lexicon’s policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life. What is the total amount of expenses (ignoring taxes) that would appear in Lexicon’s income statement for the year ended December 31 related to these items?
ABC Co. is acquiring XYZ Inc. XYZ has the following intangible assets: Customer list with an observable fair value of $45,000 Identifiable research and development costs of $150,000 A 5-year operating lease with favorable terms having a discounted present value of $6,000. Patent on a product that is deemed to have no useful life $15,000. ABC will record how much for acquired Intangible Assets from the purchase of XYZ Inc?
On June 28, Holly Co. acquired 100% of the common stock of Michael Co. The purchase price allocation included the following items: $5.1 million for a patent; $4.1 million for a trademark; $3.1 million for in-process research and development; $6.1 million for goodwill. Flax's policy is to amortize intangible assets using the straight- line method, no residual value, using a five-year useful life. REQUIRED: What is the total amount of expenses (ignoring taxes) that would appear on Flax's income statement for the year ended December 31 related to these items.
Mumtaj, Inc. is acquiring equipment as follows: Krafton will pay cash of $500,000 and sign a non-interest bearing note with a face amount of $1,661,000.The fair value (i.e. market value) of equipment on 3/31/2021 is $1,500,000The equipment will be placed in operations on the acquisition date with an expected life of 10 years. Krafton Company uses straight-line depreciation and expects no salvage value.The face amount is payable 3 years from the date of acquisition (3/31/2021). Carter Company uses a calendar year for its fiscal year. Carter Company can currently obtain loans from its banks at an interest rate of 10%Prepare an amortization table for the note payable and all necessary journal entries for the year ended 12/31/2021 including, as appropriate, adjusting entries.
In early January, Burger Mania acquired 100% of the common stock of the Crispy Taco restaurant chain. The purchase price allocation included the following items: $4 million, patent; $5 million, trademark considered to have an indefinite useful life; and $6 million, goodwill. Burger Mania’s policy is to amortize intangible assets with finite useful lives using the straight-line method, no residual value, and a five-year service life. What is the total amount of amortization expense that would appear in Burger Mania’s income statement for the first year ended December 31 related to these items?
In early January, Burger Mania acquired 100% of the common stock of the Crispy Taco restaurant chain. The purchase price allocation included the following items: $5 million, patent; $4 million, trademark considered to have an indefinite useful life; and $6 million, goodwill. Burger Mania's policy is to amortize intangible assets with finite useful lives using the straight-line method, no residual value, and a five-year service life. What is the total amount of amortization expense that would appear in Burger Mania's income statement for the first year ended December 31 related to these items? (Enter your answer in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)
Brinker International Inc.the parent of Chili's, acquired Thallicious for $32,170,000. The fair value of all Thailicioustangible and intangible assets was $30.000.000 Brinker will amortize any goodwill over the maximum number of years allowedWhat is the annual amortization of goodwill for this acquisition?
At the beginning of 2022, Metatec Incorporated acquired Ellison Technology Corporation for $590 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired: Plant and equipment (depreciable assets) $ 149 million Patent 39 million Goodwill 120 million The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a five-year useful life, no residual value, and is amortized using the straight-line method. At the end of 2024, a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined: Plant and equipment: Undiscounted sum of future cash flows $ 79 million Fair value 59 million Patent: Undiscounted sum of future cash flows $ 20 million Fair value 13 million Goodwill: Fair value of Ellison Technology Corporation $…
At the beginning of 2022, Metatec Incorporated acquired Ellison Technology Corporation for $590 million. In addition to cash, receivables, and inventory, the following assets and their fair values were also acquired: Plant and equipment (depreciable assets) $ 149 million Patent 39 million Goodwill 120 million The plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a five-year useful life, no residual value, and is amortized using the straight-line method. At the end of 2024, a change in business climate indicated to management that the assets of Ellison might be impaired. The following amounts have been determined: Plant and equipment: Undiscounted sum of future cash flows $ 79 million Fair value 59 million Patent: Undiscounted sum of future cash flows $ 20 million Fair value 13 million Goodwill: Fair value of Ellison Technology Corporation $…
Tesla acquired Amazon, for $33,520,000. The fair value of all Amazon's identifiable tangible and intangible assets was $30,000,000. Short will amortize any goodwill over the maximum number of years allowed. What is the annual amortization of goodwill for this acquisition? Multiple Choice O O $880,000 $1,760,000 $O $3,520,000 < Prev 6 of 25 Save & Ex Next
ABC Corporation acquired an asset for a purchase price of P1,200,000. This is expected to appreciate every yearby 5%. The entity will be incurring P50,000 cost to dispose the asset by the end of its 20-year investment period. If the cost to finance this investment is 4%, what is the intrinsic value of the asset after accounting for the cost of illiquidity? a. P1,583,626.69 b. P1,430,297.18 c. P8838,969.98 d. P972,129.05 e. None among the other choices