After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $306,000. Ingrid allocated $51,000 of the purchase price to goodwill. Ingrid's business reports its taxable income on a calendar-year basis. Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. b. In lieu of the original facts, assume that Ingrid purchased only a phone list with a useful life of five years for $10,500. How much amortization expense on the phone list can Ingrid deduct in year 1, year 2, and year 3? Answer is complete but not entirely correct. Year 1 amortization expense Year 2 amortization expense Year 3 amortization expense $ S $ Phone: List 2,100 x 2,100 X 2,100
After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $306,000. Ingrid allocated $51,000 of the purchase price to goodwill. Ingrid's business reports its taxable income on a calendar-year basis. Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. b. In lieu of the original facts, assume that Ingrid purchased only a phone list with a useful life of five years for $10,500. How much amortization expense on the phone list can Ingrid deduct in year 1, year 2, and year 3? Answer is complete but not entirely correct. Year 1 amortization expense Year 2 amortization expense Year 3 amortization expense $ S $ Phone: List 2,100 x 2,100 X 2,100
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A2
![**Transcription for Educational Purpose:**
**Scenario:**
After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $306,000. Ingrid allocated $51,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis.
**Note:** Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.
---
**b. In lieu of the original facts, assume that Ingrid purchased only a phone list with a useful life of five years for $10,500. How much amortization expense on the phone list can Ingrid deduct in year 1, year 2, and year 3?**
- **Answer Status:** Answer is complete but not entirely correct.
| Year | Phone List Amortization Expense |
|------|--------------------------------|
| Year 1 amortization expense | $2,100 |
| Year 2 amortization expense | $2,100 |
| Year 3 amortization expense | $2,100 |
*Explanation of Calculation:*
- The phone list is to be amortized over its useful life of five years. Given the purchase price of $10,500, the annual amortization expense is calculated by dividing the total cost by the number of years:
\[
\text{Annual Amortization Expense} = \frac{\$10,500}{5} = \$2,100
\]
- Therefore, Ingrid can deduct $2,100 each year for years 1, 2, and 3.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9a4fc75e-5a0a-4417-af24-c1d284c337f4%2F9f12a474-e290-43ae-b73e-0df6aba59161%2F74loxon_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Transcription for Educational Purpose:**
**Scenario:**
After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $306,000. Ingrid allocated $51,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis.
**Note:** Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.
---
**b. In lieu of the original facts, assume that Ingrid purchased only a phone list with a useful life of five years for $10,500. How much amortization expense on the phone list can Ingrid deduct in year 1, year 2, and year 3?**
- **Answer Status:** Answer is complete but not entirely correct.
| Year | Phone List Amortization Expense |
|------|--------------------------------|
| Year 1 amortization expense | $2,100 |
| Year 2 amortization expense | $2,100 |
| Year 3 amortization expense | $2,100 |
*Explanation of Calculation:*
- The phone list is to be amortized over its useful life of five years. Given the purchase price of $10,500, the annual amortization expense is calculated by dividing the total cost by the number of years:
\[
\text{Annual Amortization Expense} = \frac{\$10,500}{5} = \$2,100
\]
- Therefore, Ingrid can deduct $2,100 each year for years 1, 2, and 3.
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