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?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
- 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?
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