Question

On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $5.5 million, patent; $4.5 million, developed technology; $3.5 million, inprocess research and development; $6.5 million, goodwill. Lexicons policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life What is the total amount of expenses (ignoring taxes) that would appear in Lexicons income statement for the year ended December 31 related to these items? (Enter your answers in whole dollars.) ortization expense in current (partial) Cost Select ear Patent 560,548 5,500,000Amortized Developed technology In-process research and development Goodwill 4,500,000 Amortized 3,500,000 amortized 6,500,000 Amortized 458,630 Not 662,466 1,681,644 Total amortization expense current year *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.

0 0
Add a comment Improve this question Transcribed image text
Answer #1
A B C D E F G H I J
2
3 In-process R&D are accumulated as asset and when the company is acquired, it is written off against earnings.
4 Thus In-process R&D is not amortized.
5
6 Goodwill is generated when companies acquire other companies at price higher than the fair value of assets.
7 As per FASB, goodwill is not allowed to be amortized.
8
9 Patent and Development technology will be amortized.
10 Since purchase has been made on June 28, therefore amortization will occur for next 6 month.
11 Cost Life Residual value Amortization Expense(Full Year) Amortization Expense(Partial Year)
12 Patent $5,500,000 5 0 1100000 550000 =G12*(6/12)
13 Developed technology $4,500,000 5 0 900000 450000 =G13*(6/12)
14
15 Cost Select Amortization Expense in current (Partial) Year
16 Patent $5,500,000 Amortized 550000
17 Developed Technology $4,500,000 Amortized 450000
18 In-process research and development $3,500,000 Not Amortized
19 Goodwill $6,500,000 Amortized
20
Add a comment
Know the answer?
Add Answer to:
On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The...

    On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $5.5 million, patent; $4.5 million, developed technology; $3.5 million, inprocess research and development; $6.5 million, goodwill. Lexicon’s policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life. What is the total amount of expenses (ignoring taxes) that would appear in Lexicon’s income statement for the year ended December 31...

  • Cost Select Amortization expense in current (partial) year Patent $4,100,000 Developed technology 3,100,000 In-process research and...

    Cost Select Amortization expense in current (partial) year Patent $4,100,000 Developed technology 3,100,000 In-process research and development 2,100,000 Goodwill 5,100,000 Total amortization expense - current year On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $4.1 million, patent; $3.1 million, developed technology; $2.1 million, inprocess research and development; $5.1 million, goodwill. Lexicon’s policy is to amortize intangible assets using the straight-line method, no residual value, and...

  • On September 30, 2019, Morgan, Inc., acquired all of the outstanding common stock of Pathways, Inc.,...

    On September 30, 2019, Morgan, Inc., acquired all of the outstanding common stock of Pathways, Inc., for $100 million. In addition to tangible assets, Morgan recorded the following assets as a result of the acquisition: Patent $6 million Developed technology 3 million In-process research & development 2 million Goodwill 7 million Morgan's policy is to amortize intangible assets using the straight-line method, no residual value and a six-year useful life. Required: Record the journal entry to record amortization of the...

  • At the beginning of the year, Big Time Tires acquired 100% of the common stock of...

    At the beginning of the year, Big Time Tires acquired 100% of the common stock of Discount Tires. The purchase price allocation included the following items: $880,000, patent; $290,000, trademark considered to have an indefinite useful life; and $3.5 million, goodwill. Big Time Tire's policy is to amortize intangible assets with finite useful lives using the straight-line method, no residual value, and a five-year service life. What is the total amount of amortization expense that would appear in Big Time...

  • 17 In early January, Burger Mania acquired 100% of the common stock of the Crispy Taco...

    17 In early January, Burger Mania acquired 100% of the common stock of the Crispy Taco restaurant chain. The purchase price allocation included the following items: $5 million, patent: $3 million, trademark considered to have an indefinite useful life, and $5 million, goodwill Burger Mania's policy is to amortize intangible assets with finite useful lives using the straight line method, no residual value, and a five-year service life. What is the total amount of amortization expense that would appear in...

  • FireEye describes the identifiable intangible assets acquired as follows: Content intangibles represent threat intelligence, which is...

    FireEye describes the identifiable intangible assets acquired as follows: Content intangibles represent threat intelligence, which is continually gathered from ongoing monitoring of endpoints and by incident response and remediation teams. The intangible assets attributable to customer relationships relate to Mandiant’s ability to sell existing, in-process and future versions of its products and services to its existing customers. Developed technology intangibles includes a combination of patented and unpatented technology, trade secrets, and computer software and process that represent the foundation for...

  • On January 1, 2017, Procise Corporation acquired 100 percent of the outstanding voting stock of Gauge...

    On January 1, 2017, Procise Corporation acquired 100 percent of the outstanding voting stock of Gauge Rite Corporation for $1,947,900 cash. On the acquisition date, Gauge Rite had the following balance sheet: $ 27,000 Cash Accounts receivable Land Equipment (net) 720,000 1,917,000 $ 2,783,000 Accounts payable Long-term debt Common stock Retained earnings $ 151,000 933,000 1,020,000 679,000 $ 2,783,000 At the acquisition date, the following allocation was prepared: $ 1,947,900 1,699,000 248,900 Fair value of consideration transferred Book value acquired...

  • EXCEL CASE 2 On January 1, 2017, Hi-Speed.com acquired 100 percent of the common stock of...

    EXCEL CASE 2 On January 1, 2017, Hi-Speed.com acquired 100 percent of the common stock of Wi-Free Co. for cash of $730,000. The consideration transferred was allocated among Wi-Free’s net assets as follows: Page 151 Wi-Free fair value (cash paid by Hi-Speed) $730,000 Book value of Wi-Free:   Common stock and additional paid-in capital (APIC) $130,000   Retained earnings 370,000 500,000 Excess fair value over book value to 230,000   In-process R&D $ 75,000   Computer software (overvalued) (30,000)   Internet domain name  120,000  165,000   ...

  • EXCEL CASE 2 On January 1, 2017, Hi-Speed.com acquired 100 percent of the common stock of...

    EXCEL CASE 2 On January 1, 2017, Hi-Speed.com acquired 100 percent of the common stock of Wi-Free Co. for cash of $730,000. The consideration transferred was allocated among Wi-Free’s net assets as follows: Page 151 Wi-Free fair value (cash paid by Hi-Speed) $730,000 Book value of Wi-Free:   Common stock and additional paid-in capital (APIC) $130,000   Retained earnings 370,000 500,000 Excess fair value over book value to 230,000   In-process R&D $ 75,000   Computer software (overvalued) (30,000)   Internet domain name  120,000  165,000   ...

  • Using the below chart, 1. Assume that Microsoft incurred 60% of its research and development expenses...

    Using the below chart, 1. Assume that Microsoft incurred 60% of its research and development expenses after it had established technological feasibility. The average product life was two years, and the company begins amortizing software costs at the beginning of the following year. For 1997, 1998 and 1999, estimate the related impacts on operating expense and capitalized R&D costs. Ignore any tax effects. 2. Estimate the amount of revenue that Microsoft would have reported in each quarter from 1996 through...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT