A. how would vickis assets be recorded for tax purposes by, Ask an Expert

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On January 1 of the current year, Palm Corporation purchases the net assets of Vicki's unincorporated business for $600,000. The tangible net assets have a $300,000 book value and a $400,000 FMV. The purchase agreement states that Vicki will not compete with Palm Corporation by starting a new business in the same area for a period of five years. The stated consideration received by Vicki for the covenant not to compete is $50,000. Other intangible assets included in the purchase agreement are as follows:

Item
Goodwill $70,000
Patents (12-year remaining legal life) $30,000
Customer list $50,000

a. How would Vicki's assets be recorded for tax purposes by Palm Corporation?

b. What is the amortization amount for each intangible asset in the current year?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M944499

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