Reyd Company has bought the entity from previous owners through a leveraged management buy-in (MBI). The company incurred a total transaction cost related to the MBI in the amount of P5,000,000 which was broken into the following specific costs: P1,000,000 related to the issue of own equity instrument, P1,500,000 related to the issue of debt instrument and P2,500,000 for the consultants and lawyers fees. The management proposes to capitalize the P5,000,000 as intangible asset. What amount should the company recognize as an intangible asset? O P5,000,000 O Answer not given O P2,500,000 O P1,500,000 O P4,000,000

Reyd Company has bought the entity from previous owners through a leveraged management buy-in (MBI). The company incurred a total transaction cost related to the MBI in the amount of P5,000,000 which was broken into the following specific costs: P1,000,000 related to the issue of own equity instrument, P1,500,000 related to the issue of debt instrument and P2,500,000 for the consultants and lawyers fees. The management proposes to capitalize the P5,000,000 as intangible asset. What amount should the company recognize as an intangible asset? O P5,000,000 O Answer not given O P2,500,000 O P1,500,000 O P4,000,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter9: Acquisitions Of Property

Section: Chapter Questions

Problem 44P

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Sailor Company's has brought the entity from previous owners through a leverage management buy-in (MBI). The company incurred a total transaction cost related to the MBI in the amount of P5,000,000 which was broken into the following specific costs: P1,000,000 related to the issue of own equity instrument, P1,500,000 related to the issue of debt instrument and P2,500,000 for the consultants and lawyers fees. The management proposes to capitalize the P5,000,000 as intangible asset. What amount should the company recognize as an intangible asset?
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