29 Instructions : Choose the best multiple choice answer and explain why you cho

Question

29 Instructions : Choose the best multiple choice answer and explain why you chose the answer. MUST provide 2-3 sentence brief explanation and show all work. All sources must be noted.

____   29.   On August 1, 2016, Red Inc purchased an existing business. With respect to the acquired assets of the business, Red allocated $80,000 of the purchase price to a patent. The patent will expire in 17 years. Determine the total amount that Red may amortize for 2016 for the patent.

a.

$555.

b.

$6,667.

c.

$2,222.

d.

$6,250.

e.

None of the above.

a.

$555.

b.

$6,667.

c.

$2,222.

d.

$6,250.

e.

None of the above.

Explanation / Answer

SOLUTION

The total amount that Red may amortize for 2016 for the patent is $2,222.

The amortization period under section197 intangibles is 15 years.

So, amount of amortisation =

= $80,000 * (5 months / 180 months)

= $2,222.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.