Question

After several profitable years running her business, Ingrid decided to acquire the assets of a small...

After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $360,000. Ingrid allocated $60,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

a. How much amortization expense on the goodwill can Ingrid deduct in year 1, year 2, and year 3?

b. In lieu of the original facts, assume that Ingrid purchased only a phone list with a useful life of 5 years for $15,000. How much amortization expense on the phone list can Ingrid deduct in year 1, year 2, and year 3?

Homework Answers

Answer #1

Ans:

A.GOODWILL TO BE AMORTIZED=$60,000

AMORTIZATION PERIOD=15 YEARS=180 MONTHS

IT WAS PURCHASED IN MAY, SO FOR 1ST YEAR IT HAS TO BE AMORTIZED FOR 8 MONTHS TILL DECEMBER. AMOUNT=$(60,000*8/180)=$2,667

AMORTIZATION IN YEARS 2 AND 3=$(60,000*12/180)=$4,000 FOR EACH OF 2ND AND 3RD YEAR

B.PRICE OF PHONE LIST=$15,000

AMORTIZATION PERIOD=5 YEARS=60 MONTHS

IT WAS PURCHASED IN MAY, SO FOR 1ST YEAR IT HAS TO BE AMORTIZED FOR 8 MONTHS TILL DECEMBER. AMOUNT=$(15,000*8/60)=$2,000

AMORTIZATION IN YEARS 2 AND 3=$(15,000*12/60)=$3,000 FOR EACH OF 2ND AND 3RD YEAR

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
After several profitable years running her business, Ingrid decided to acquire the assets of a small...
After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $360,000. Ingrid allocated $60,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) a. How much amortization expense on the goodwill can Ingrid deduct in year 1, year 2,...
After several profitable years running her business, Ingrid decided to acquire the assets of a small...
After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $402,000. Ingrid allocated $67,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis. a. How much amortization expense on the goodwill can Ingrid deduct in year 1, year 2, and year 3? b. In lieu of the original facts, assume that Ingrid purchased...
After several profitable years running her business, Ingrid decided to acquire the assets of a small...
After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $402,000. Ingrid allocated $67,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) . In lieu of the original facts, assume that Ingrid purchased only a phone list with...
After several profitable years running her business, Ingrid decided to acquire the assets of a small...
After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $342,000. Ingrid allocated $57,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) a. How much amortization expense on the goodwill can Ingrid deduct in year 1, year 2,...
After several profitable years running her business, Ingrid decided to acquire the assets of a small...
After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $324,000. Ingrid allocated $54,000 of the purchase price to goodwill. Ingrid’s business reports its taxable income on a calendar-year basis. How much amortization expense on the goodwill can Ingrid deduct in year 1, year 2, and year 3?     
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2018. In the...
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2018. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2018: Asset Cost Date Placed in Service Office furniture $ 150,000 02/03/2018 Machinery 1,560,000 07/22/2018 Used delivery truck* 40,000 08/17/2018 *Not considered a luxury automobile. During 2018, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in...
1. Jose purchased a delivery van for his business through an online auction. His winning bid...
1. Jose purchased a delivery van for his business through an online auction. His winning bid for the van was $25,250. In addition, Jose incurred the following expenses before using the van: shipping costs of $1,270; paint to match the other fleet vehicles at a cost of $1,440; registration costs of $2,970, which included $2,750 of sales tax and a registration fee of $220; wash and detailing for $121; and an engine tune-up for $327. What is Jose’s cost basis...
1. Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $15,000 for the truck....
1. Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $15,000 for the truck. The truck is expected to have a $2,500 residual value and a 5-year life. Cambridge has a December 31 fiscal year end. Using the double-declining balance method, how much is the 2019 depreciation expense? (Enter only whole dollar values.) Hint: what is the year 2 depreciation amount? 2. Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $22,000 for the truck. The...
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT