Intangible assets may be internally generated or purchased from another party. In either case, what costs should be included in the initial valuation of the asset is an issue.

Instructions

(a) Identify the typical costs included in the cash purchase of an intangible asset.
(b) Discuss how to determine the cost of an intangible asset acquired in a non-cash transaction.
(c) Describe how to determine the cost of several intangible assets acquired in a "basket purchase." Provide a numerical example involving intangibles being acquired for a total price of $90,000.

Question

Intangible assets may be internally generated or purchased from another party. In either case, what costs should be included in the initial valuation of the asset is an issue.

Instructions

(a) Identify the typical costs included in the cash purchase of an intangible asset.
(b) Discuss how to determine the cost of an intangible asset acquired in a non-cash transaction.
(c) Describe how to determine the cost of several intangible assets acquired in a "basket purchase." Provide a numerical example involving intangibles being acquired for a total price of $90,000.

Quizplus · Accepted Answer

The Answer of Intangible assets may be internally generated or purchased from another party. In either case, what costs should be included in the initial valuation of the asset is an issue.

Instructions

(a) Identify the typical costs included in the cash purchase of an intangible asset.
(b) Discuss how to determine the cost of an intangible asset acquired in a non-cash transaction.
(c) Describe how to determine the cost of several intangible assets acquired in a "basket purchase." Provide a numerical example involving intangibles being acquired for a total price of $90,000.

Intangible Assets May Be Internally Generated or Purchased from Another