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Chapter 12: Question 2 (page 637)

If intangibles are acquired for stock, how is the cost of the intangible determined?

Short Answer

Expert verified

Suppose intangibles are purchased in exchange for stock. In that case, the cost of the intangible is the fair value of the consideration given or the fair value of the consideration received, depending upon whichever is more.

Step by step solution

01

Intangible Asset

Intangibles have two types of useful lives: limited and indefinite

02

Cost of Intangible

It is the fair value of the consideration given or the fair value of the consideration received (whichever is more).

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