Need help with this accounting questions XYZ Corp. purchases three trademarks from ABC Inc. for$500,000. The trademarks were carried on ABC's books as follows:Trademark X: $10,000; Trademark Y: $15,000; and TrademarkZ: $25,000. When XYZ acquired the trademarks, their fair marketvalues were: Trademark X: $100,000; Trademark Y: $300,000;and Trademark Z: $100,000. At what amount should XYZ recordTrademark Y?

Step 1: Definition of Fair Value AllocationWhen assets are purchased as a group, the purchase price…

Answered: XYZ Corp. purchases three trademarks…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

See similar textbooks

Similar questions

Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2020, for $420,000 in cash. Lowly's book value at that date was reported as $600,000, and the fair value of the noncontrolling interest was assessed at $280,000. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2021, Lowly acquired a 20 percent interest in Mighty. The price of $240,000 was equivalent to 20 percent of Mighty's book and fair value. Neither company has paid dividends since these acquisitions occurred. On January 1, 2021, Lowly's book value was $800,000, a figure that rises to $840,000 (common stock of $300,000 and retained earnings of $540,000) by year- end. Mighty's book value was $1.70 million at the beginning of 2021 and $1.80 million (common stock of $1 million and retained earnings of $800,000) at December 31, 2021. No intra-entity transactions have occurred, and no additional stock has been…
zeke Ltd. (Zeke) contributed a patent to VE Company (VE) on January 1, 2023. VE is a business and is deemed to be a special-purpose entity (SPE). The fair value of VE's net identifiable assets (not including the patent) are $75,000. Zeke is the primary beneficiary. The patent has a carrying value of $10,000 on Zeke's separate-entity balance sheet and a fair value of $40,000. The fair value of the noncontrolling interest on January 1, 2023 is $30,000. What is the total value of the consideration given to VE? Multiple Choice $40,000 $105,000 $75,000 $70,000
Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2020, for $459,900 in cash. Lowly's book value at that date was reported as $637,500, and the fair value of the noncontrolling interest was assessed at $306,600. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2021, Lowly acquired a 20 percent interest in Mighty. The price of $380,000 was equivalent to 20 percent of Mighty's book and fair value. Neither company has paid dividends since these acquisitions occurred. On January 1, 2021, Lowly's book value was $899,500, a figure that rises to $961,750 (common stock of $300,000 and retained earnings of $661,750) by year-end. Mighty's book value was $1.90 million at the beginning of 2021 and $2.00 million (common stock of $1 million and retained earnings of $1,000,000) at December 31, 2021. No intra-entity transactions have occurred, and no additional stock has…
On December 1, 20X1, CANOROUS Co. granted a 5-year franchise to MELODIOUS, Inc. for an initial franchise fee of P 400,000 and a 10% sales-based royalty. The initial franchise fee is non-refundable and due upon signing of the contract. At contract inception, CANOROUS determines that the nature of its promise to grant the license is to provide the customer with the right to access CANOROUS' intellectual property as it exists throughout the license period. As of December 31, 20X1, CANOROUS has no remaining obligation or intent to refund any of the cash received, all the initial services necessary to setup the contract have been performed, and MELODIOUS started operating the franchised business. MELODIOUS reported sales of P 800,000 for 20X1. How much revenue shall CANOROUS recognize in 20X1? (Round off your answer to the nearest peso.)
Information concerning Blue Corporation’s intangible assets is as follows. 1. On January 1, 2020, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $57,500. Of this amount, $11,500 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $11,500 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable, and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 10% (the implicit rate for a loan of this type) is $36,450. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Blue’s revenue from the franchise for 2020 was $840,000. Blue estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.)…
Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2017, for $420,000 in cash. Lowly’s book value at that date was reported as $600,000 and the fair value of the noncontrolling interest was assessed at $280,000. Any excess acquisition-date fair value over Lowly’s book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2018, Lowly acquired a 20 percent interest in Mighty. The price of $240,000 was equivalent to 20 percent of Mighty’s book and fair value.Neither company has paid dividends since these acquisitions occurred. On January 1, 2018, Lowly’s book value was $800,000, a figure that rises to $840,000 (common stock of $300,000 and retained earnings of $540,000) by year-end. Mighty’s book value was $1.7 million at the beginning of 2018 and $1.8 million (common stock of $1 million and retained earnings of $800,000) at December 31, 2018. No intra-entity transactions have occurred and no additional stock has been sold.…
Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2017, for $558,900 in cash. Lowly's book value at that date was reported as $817,500 and the fair value of the noncontrolling interest was assessed at $372,600. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2018, Lowly acquired a 20 percent interest in Mighty. The price of $362,000 was equivalent to 20 percent of Mighty's book and fair value. Neither company has paid dividends since these acquisitions occurred. On January 1, 2018, Lowly's book value was $1,060,500, a figure that rises to $1,105,750 (common stock of $300,000 and retained earnings of $805,750) by year-end. Mighty's book value was $1.81 million at the beginning of 2018 and $1.91 million (common stock of $1 million and retained earnings of $910,000) at December 31, 2018. No intra-entity transactions have occurred and no additional stock has been…
Kami, Inc. charges an initial franchise fee of P500,000 for the right to operate to operate as a franchise of Kami. Of this amount, P100,000 is payable when the agreement was signed and the balance is payable in a noninterest bearing note in five annual payments of P80,000 each. In return for the initial franchise fee, the franchisor will help locate the site, negotiate the lease or purchase of the site, supervise the construction activity, and provide the bookkeeping services. The credit rating of the franchisee indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five annual receipts of P80,000 each discounted at 8% is P319,416.80. The discount represents the interest revenue to be accrued by the franchisor over the payment period. If the probability of refunding the initial franchise fee is extremely low, the amount of future services to be provided to the franchisee is minimal, collectability of the note is reasonably assured and substantial…
Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2017, for $567,600 in cash. Lowly's book value at that date was reported as $760,000 and the fair value of the noncontrolling interest was assessed at $378,400. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2018, Lowly acquired a 20 percent interest in Mighty. The price of $440,000 was equivalent to 20 percent of Mighty's book and fair value. Neither company has paid dividends since these acquisitions occurred. On January 1, 2018, Lowly's book value was $992,000, a figure that rises to $1,054,500 (common stock of $300,000 and retained earnings of $754,500) by year-end. Mighty's book value was $2.20 million at the beginning of 2018 and $2.30 million (common stock of $1 million and retained earnings of $1,300,000) at December 31, 2018. No intra-entity transactions have occurred and no additional stock has been…
Kosher Pickle Company acquires all the outstanding stock of Midwest Produce for $19 million. The fair value of Midwest’s assets is $14.3 million. The fair value of Midwest’s liabilities is $2.5 million. Calculate the amount paid for goodwill.
Tran Technologies licenses its functional intellectual property to Lyon Industries. Terms of the arrangement require Lyon to pay Tran $500,000 on April 1, 2021, when Lyon first obtains access to Tran's intellectual property, and then in the future to pay Tran a royalty of 4% of future sales of products that utilize that intellectual property. Tran anticipates receiving sales-based royalties of $1,000,000 during 2021 and $1,500,000/year for the years 2022-2026. Assume Tran accounts for the Lyon license as a right of use, because Tran's actions subsequent to April 1, 2021, will affect the benefits that Lyon receives from access to Tran's intellectual property. Required: 1. Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Identify the specific nine-digit Codification citation (XXX-XX-XX-XX) for accounting for variable consideration arising from sales-based royalties on licenses of intellectual property, and consider the relevant GAAP. 2. What journal…
The Individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent Interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $420,000. At the acquisition date, the fair value of the noncontrolling interest was $280,000 and Bellstar's book value was $550,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $150,000. This Intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its Investment In Bellstar. Abbey sold Bellstar land with a book value of $70,000 on January 2, 2023, for $140,000. Bellstar still holds this land at the end of the current year. Bellstar regularly transfers Inventory to Abbey. In 2023, it shipped Inventory costing $130,000 to Abbey at a price of $200,000. During 2024, Intra-entity shipments totaled $250,000, although the original…

SEE MORE QUESTIONS

Recommended textbooks for you

CONCEPTS IN FED.TAX., 2020-W/ACCESS

Accounting

ISBN:

9780357110362

Author:

Murphy

Publisher:

CENGAGE L