According to the most current FASB standards, intangible assets acquired in a basket purchase which represents the acquisition of an entire business should be
A) valued by allocating the total purchase price according to the relative fair values of all assets acquired, regardless of whether the assets are separately tradeable or contract based.
B) valued by allocating the total purchase price according to the relative fair values only of intangible assets that are separately tradable or contract based.
C) valued by recording separately traded and contract based intangible assets at their individual fair values with any unallocated purchase price being recognized as goodwill.
D) valued by recording separately traded and contract based intangible assets at their individual fair values with any unallocated purchase price being expensed in the year of acquisition.

Question

Quizplus · Accepted Answer

Under current FASB standards, intangible assets acquired in a basket purchase which represents the acquisition of an entire business should be valued by recording separately traded and contract based intangible assets at their individual fair values with any unallocated purchase price being recognized as goodwill. This approach aligns with the principle of recording assets at their fair value on the acquisition date. Any unallocated purchase price represents the excess of the purchase price over the fair values of the separately identified assets and liabilities, and is recognized as goodwill. Therefore, choice C is the best option.

According to the Most Current FASB Standards, Intangible Assets Acquired