On January 1 of the current year, Lemon Meyer Corporation purchases the net assets of Vivien's unincorporated business for $1,100,000. The tangible net assets have a $400,000 book value and a $500,000 FMV. The purchase agreement states that Vivien will not compete with Lemon Meyer Corporation by starting a new business in the same area for a period of five years. The stated consideration received by Vivien for the covenant not to compete is $80,000. Other intangible assets included in the purchase agreement are as follows. E (Click the icon to view the other intangible assets.) Read the requirements Requirement a. How would Vivien's assets be recorded for tax purposes by Lemon Meyer Corporation? Recorded value Tangible assets - X Data table Intangible assets: Covenant not to compete • Goodwill: $400,000 • Patents (13-year remaining useful life): $70,000 • Customer list $50,000 Goodwill Patents Customer list Total Print Done

On January 1 of the current year, Lemon Meyer Corporation purchases the net assets of Vivien's unincorporated business for $1,100,000. The tangible net assets have a $400,000 book value and a $500,000 FMV. The purchase agreement states that Vivien will not compete with Lemon Meyer Corporation by starting a new business in the same area for a period of five years. The stated consideration received by Vivien for the covenant not to compete is $80,000. Other intangible assets included in the purchase agreement are as follows. E (Click the icon to view the other intangible assets.) Read the requirements Requirement a. How would Vivien's assets be recorded for tax purposes by Lemon Meyer Corporation? Recorded value Tangible assets - X Data table Intangible assets: Covenant not to compete • Goodwill: $400,000 • Patents (13-year remaining useful life): $70,000 • Customer list $50,000 Goodwill Patents Customer list Total Print Done

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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