Answered: Explain the alternative methods that…

Explain the alternative methods that have been suggested to account for goodwill or excess on acquisition? Give three reasons why immediate expensing of intangibles may be justified.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter13: Property Transactions: Determination Of Gain Or Loss, Basis Considerations, And Nonta Xable Exchanges

Section: Chapter Questions

Problem 4BCRQ

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Concept explainers

Reasons for Estate Planning

Planning is a process that helps decide in advance about future activities and operations. Planning helps to draft the procedures by identifying, analyzing, and designing how to work, when to work, by whom should be done, and what has to be done. It is the primary step followed by a person, business organizations, institutions, companies, etc.

Question

Explain the alternative methods that have been suggested to account for goodwill or excess on acquisition? Give three reasons why immediate expensing of intangibles may be justified. Do you agree with these reasons? Explain.

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

Expert Solution

Step 1

Intangible Assets are the non current fixed assets which can not be seen or touch. But they provide monetary economic benefits to the firm by increasing the cash flows from operations. Some example of intangible assets are goodwill, patent and copyrights.

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