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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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On January 11, 2019, Hughes Company applied for a trade name. Legal costs associated with the application were $20,000. In January 2020, the company incurred $8,000 of legal fees in a successful defense of its trade name. The trade name was not impaired in 2019 and 2020.

Required:

  1. 1. Compute the ending carrying value of the trade name for 2019 and 2020.
  2. 2. Next Level Should the company amortize the trade name? Under what circumstances would the trade name be amortized?

1.

To determine

Compute the ending carrying value of the trade name of Company H for the year 2020.

Explanation

Trademark: It is an exclusive right of an entity or business to display its identity of the products or goods through a registered word, symbol, or emblem.

Compute the ending carrying value of the trade name of Company H for the year 2020 as follows:

Particulars...

2.

To determine

Describe whether the company should amortize the trade name and if so state the circumstance under which it be amortized.

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