Chapter 11, Problem 11.28E

Goodwill Computation, Acquisition of Intangibles, Amortization. Alto Devices acquires Medifast, a small start-up company, by paying $2,170,000 in cash on January 2. Following are the book values and fair values of Medifast on the date of acquisition.

Medifast	Book Value	Fair Value
Cash	$ 36,000	$ 36,000
Receivables	100,437	100,400
Manufacturing equipment	640,275	654,234
Patents (remaining life 10 years)	60,000	854,000
Trademarks	14,652	187,450
Payables	58,902	58,902

Required

1. a. What is the amount of goodwill acquired?
2. b. What intangible assets are acquired? Which of the intangibles have an indefinite life? Which will be amortized? What will the amortization expense be in the year after acquisition?