Orbit Inc. purchased Planet Co. on January 1, 20X3. At that time an existing patent having a 5-year life was not recorded as a separately identified intangible asset. At the end of fiscal year 20X4, it is determined the patent is valued at $20,000, and goodwill has a book value of $100,000. How should intangible assets be reported at the beginning of fiscal year 20X5?
A)Goodwill $100,000 Patent $0
B)Goodwill $100,000 Patent $20,000
C)Goodwill $80,000 Patent $20,000
D)Goodwill $80,000 Patent $16,000

Question

Quizplus · Accepted Answer

In no case may the measurement period exceed a year; therefore, goodwill will remain at its $100,000 book value, and the patent will not be recorded.

Orbit Inc Purchased Planet Co