Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 2, Problem 22P
a.
To determine
Describe the criteria for determining whether an intangible asset acquired in a business combination should be separately recognized apart from
b.
To determine
Identify which recognition criteria (separability and legal/contractual) may or may not apply in recognizing the intangible on the acquiring firm’s financial statements.
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Jonas Tech Corporation recently acquired Innovation Plus Company. The combined firm consists of three related businesses that will serve as reporting units. In connection with the acquisition, Jonas requests your help with the following asset valuation and allocation issues. Support your answers with references to FASB ASC as appropriate.Jonas recognizes several identifiable intangibles from its acquisition of Innovation Plus. It expresses the desire to have these intangible assets written down to zero in the acquisition period.The price Jonas paid for Innovation Plus indicates that it paid a large amount for goodwill. However, Jonas worries that any future goodwill impairment may send the wrong signal to its investors about the wisdom of the Innovation Plus acquisition. Jonas thus wishes to allocate the combined goodwill of all of its reporting units to one account called Enterprise Goodwill. In this way, Jonas hopes to minimize the possibility of goodwill impairment because a decline…
Which of the following is/are not capitalized as an intangible asset?
Select one:
a. Legal costs to defend a patent successfully and goodwill acquired when a company purchases another company.
b. Costs of an internally developed patent and goodwill acquired when a company purchases another company.
c. Costs of an internally developed patent and legal costs to defend a patent successfully.
d. Goodwill acquired when a company purchases another company and costs to purchase a patent.
e. Costs to purchase a patent and legal costs to defend a patent successfully.
Statement I: An internally generated goodwill shall not be recognized as an intangible asset.Statement II: In amortizing intangible asset, the appropriate method is the straight-line method, unless the pattern in which the asset’s economic benefits are consumed by the enterprise can be determined reliably.Statement III: Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance should be recognized as intangible assets.Which of the following statements are true?
I and III only
I, II and III
I and II only
II and III only
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1QCh. 2 - Describe the concept of a synergy. What are some...Ch. 2 - Prob. 3QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 39APBCh. 2 - Prob. 40APB
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which one of the following internally-generated items may be eligible for capitalization as intangible assets in accordance with IAS 38 Intangible Assets? (Ignore business combinations.) Select one: a. Goodwill b. A pre-production prototype c. The cost of researching new material d. A customer listarrow_forwardWhich of the following statements concerning Intangible assets are TRUE?(In your answer, provide the appropriate letter(s) A – E for each statement believed to be true)A. Goodwill can never be recognisedB. Only purchased intangibles can be recognisedC. Intangibles are amortised over their useful life where the life is finiteD. Research expenditure is expensedE. A brand name may be recognised when one business acquires anotherarrow_forwardMelton Devices acquires Beck, a small start-up company, by paying $2,170,900 in cash on January 2. Following are the book values and fair values of Beck on the date of acquisition. (Click the icon to view the book values and fair values.) Read the requirements. Requirement a. What is the amount of goodwill acquired? The amount of goodwill acquired Requirement 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? (If an input field is not used in the table leave the field empty, do not enter a zero) Intangible Asset Finite or Indefinite Life Amortization Amortized? Expense Trial Balance Beck Book Value Fair Value Cash $ 29,000 $ 29,000 Receivables 100,700 100,650 Manufacturing Equipment 640,350 654,500 Patents (remaining life 8 years) 60,600 684,000 Trademarks 14,650 187,500 Payables 58,904 58,904 Print Donearrow_forward
- The brand name of hand sanitizers has acquired by the company as part of another company acquisition. Does this fulfil the criteria to be recognised as intangible assets as per the provision of IAS 38? Explain.arrow_forwardPlease provide answerarrow_forwardAssets Classified as Intagible Assets Required: What is the total amount to be recognized as intangible assets?arrow_forward
- Indicate whether each of the following statements is true or false. If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent. If the recoverable amount of an indefinite-life intangible other than goodwill is less than its carrying value, an impairment loss must be recognized. Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.arrow_forwardExamples of intangible assets include: Select one alternative: loyal customers patents trademarks All of the given answers are correctarrow_forwardS1: The realization process depends on the type of the property, plant and equipment-if the property, plant and equipment are non-depreciable, the realization of a gain or loss on an intercompany sale must await the property, plant and equipment's resale to outsiders; if the property. Plant and equipment are depreciable, the realization of gain or loss on an intercompany sale occurs on a piece meal basis over the remaining useful life of the property, plant and equipment. S2: Unrealized intercompany gains or losses involving the non-depreciable assets are viewed as being realized gradually over the remaining life of the asset as it is used by the purchasing affiliate. O Only S1 is correct. O Only S2 is correct. O Both statements are correct. O Both statements are incorrect.arrow_forward
- 1arrow_forwardExplain the alternative methods that have been suggested to account for goodwill or excess on acquisition? Give three reasons why immediate expensing of intangibles may be justified. Do you agree with these reasons? Explain.arrow_forwardA company may acquire property, plant, and equipment and intangible assets for cash, in exchange for a deferred payment contract, by exchanging other assets, or by a combination of these methods. Required: 1. Identify six types of costs that should be capitalized as the cost of a parcel of land. For your answer, assume that the land has an existing building that is to be removed in the immediate future in order that a new building can be constructed on the site. 2. At what amount should a company record an asset acquired in exchange for a deferred payment contract? 3. In general, at what amount should assets received in exchange for other nonmonetary assets be valued? Specifically, at what amount should a company value a new machine acquired by exchanging an older, similar machine and paying cash?arrow_forward
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