TCO C) Intangible assets may be internally generated or purchased from another p
ID: 2346306 • Letter: T
Question
TCO C) Intangible assets may be internally generated or purchased from another party. In either case, the cost that should be included in the initial valuation of the asset is an issue.Instructions:
(a) Identify the typical costs included in the cash purchase of an intangible asset.
(b) Discuss how to determine the cost of an intangible asset acquired in a non-cash transaction.
(c) Describe how to determine the cost of several intangible assets acquired in a “basket purchase.” Provide a numerical example involving intangibles being acquired for a total price of $120,000
Explanation / Answer
(a). Typical costs included in the cash purchase of an intangibe asset is "Purchased price, Legal fees, and other incidental expenses. (b). If any company acuried an asset in a non-cash transanction then cost of intangible asset is the fair value of the consideration given or the fair value of the intangible received. (c). If any company buys several intangible to acuired in a basket purchase assets then cost of those is based on fair values of the assets. For exmple involving intangible being acquired for a total price of $120,000 then cost of intangible assets also $120,000.Related Questions
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