Braxwell Corporation acquired the following assets associated with a manufacturing facility for a lump-sum price of $9,000,000. According to independent appraisals, the fair values were $4,000,000, $2,000,000, $3,000,000, and $1,000,000 for the building, patent, land, and equipment, respectively. The initial value of the patent would be:
A) $2,000,000.
B) $2,250,000.
C) $1,800,000.
D) $0.

Question

Quizplus · Accepted Answer

Relative fair value of patent = $2,000,000/$10,000,000 = 20%. Initial value = $9,000,000 × 20% = $1,800,000.

Braxwell Corporation Acquired the Following Assets Associated with a Manufacturing