On January 1,2016,Charlie Corporation acquires all of the net assets of Rocky Corporation for $2,000,000.The following intangible assets are included in the purchase agreement: What is the total amount of amortization allowed in 2016?

Question

On January 1,2016,Charlie Corporation acquires all of the net assets of Rocky Corporation for $2,000,000.The following intangible assets are included in the purchase agreement:  What is the total amount of amortization allowed in 2016?

Quizplus · Accepted Answer

The total amount of amortization allowed in 2016 is $22,000. This is calculated by adding up the amortizable intangible assets ($300,000 for patents and $200,000 for customer lists) and dividing by their total useful life (25 years for patents and 10 years for customer lists) to get an annual amortization expense. 
($300,000/25) + ($200,000/10) = $12,000 + $10,000 = $22,000.

On January 1,2016,Charlie Corporation Acquires All of the Net Assets