Capitalize purchase price paid and legalfiling fees

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Capitalize purchase price paid and legal/filing fees. The legal life of a copyright is the life of the author plus 70 years. Trademarks A symbol, design, or logo associated with a business. If internally developed, trademarks have no recorded asset cost. If purchased, a trademark is recorded at cost. Registered with U.S. Patent Office and renewable indefinitely in 10-year periods.
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10-10 Intangible Assets Franchise Franchisor grants the franchisee exclusive rights to use the franchisor’s trademark within a certain area for a specified period of time Capitalized costs include initial franchise fee and legal/license fees
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10-11 Occurs when one company buys another company. The amount by which the consideration exchanged exceeds the fair value of net assets acquired. Only purchased goodwill is an intangible asset. Goodwill Intangible Assets Goodwill is not amortized.
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10-12 Goodwill Martin Company paid $1,500,000 to purchase all of Bartlett Company’s assets and assumed James Company’s liabilities of $350,000. Bartlett Company’s assets were appraised at a fair value of $1,300,000. What amount of goodwill should Martin Company record as a result of the purchase? Martin Company paid $1,500,000 to purchase all of Bartlett Company’s assets and assumed James Company’s liabilities of $350,000. Bartlett Company’s assets were appraised at a fair value of $1,300,000. What amount of goodwill should Martin Company record as a result of the purchase?
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10-13 Several assets are acquired for a single price that may be lower than the sum of the individual asset fair values. Several assets are acquired for a single price that may be lower than the sum of the individual asset fair values. Lump-Sum Purchases Allocation of the lump-sum price is based on relative fair values of the individual assets. Allocation of the lump-sum price is based on relative fair values of the individual assets. See example on next slide…..
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10-14 Appraised % of Purchase Assigned Asset Value Value Price Cost (a) (b)* (c) (b × c) Land 87,500 $ 35% 200,000 $ 70,000 $ Building 162,500 65% 200,000 130,000 Total 250,000 $ 200,000 $ * $87,500÷$250,000 = 35% $162,500÷$250,000 = 65% May 13: Land .......................................................... 70,000 Building ………………….…….…………… 130,000 Cash…………………………… ..... 200,000 To record lump-sum purchase of land and building. Lump-Sum Purchases - Example On May 13, we purchase land and building for $200,000 cash. The appraised value of the building is $162,500, and the land is appraised at $87,500. How will the $200,000 purchase price be allocated to the land and the building?
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10-15 Noncash Acquisitions Issuance of equity securities Deferred payments (issuance of notes) Donated assets Exchanges Issuance of equity securities Deferred payments (issuance of notes) Donated assets Exchanges The asset acquired is recorded at the fair value of the consideration given or the fair value of the asset acquired, whichever is more clearly evident.
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