On January 1, 2015, 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 2015?

Question

On January 1, 2015, 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 2015?

Quizplus · Accepted Answer

All of the intangible assets qualify as Section 197 intangible assets and are amortizable over 15 years. The 15-year amortization period applies to the covenant not to compete even though the covenant is only for five years. The total is computed as follows: ($105,000 + $45,000 + $60,000 + $120,000)/15 years = $22,000.

On January 1, 2015, Charlie Corporation Acquires All of the Net