Sudbury Inc purchased a patent from French River Corp for $25,000.Sudbury was pleased with the purchase, because the patent was going to allow them to produce Widgets that were complimentary to their existing product of Nidgets.They had developed the patent for Nidgets themselves at a cost of $8,000 and estimated that it was worth about $20,000.What value will Sudbury report for intangible assets related to patents on their balance sheet immediately after the purchase?

Question

Quizplus · Accepted Answer

Sudbury paid $25,000 to acquire the patent from French River Corp, therefore, the value that will be reported for the intangible asset related to patents on their balance sheet immediately after the purchase is $25,000. The cost of developing the Nidgets patent is not relevant to the value of the newly acquired patent.

Sudbury Inc Purchased a Patent from French River Corp for $25,000.Sudbury