On January 2, 2014, Fran Acquires a Business from Chuck

question 119

Multiple Choice

On January 2, 2014, Fran acquires a business from Chuck. Among the assets purchased are the following intangibles: patent with a 7-year remaining life, a covenant not to compete for 10 years, and goodwill.
Of the purchase price, $140,000 was paid for the patent and $60,000 for the covenant. The amount of the excess of the purchase price over the identifiable assets was $100,000. What is the amount of the amortization deduction for 2014?

• A) $10,667.
• B) $16,000.
• C) $20,000.
• D) $32,667.
• E) None of the above.

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Definitions:

Advertising

The action or profession of producing advertisements for commercial products or services.

Monopolistically Competitive

A market structure characterized by many sellers offering similar but not identical products, leading to competitive pricing and product differentiation.

Economic Profit

The net financial outcome for a company after all explicit and implicit costs are taken from its overall earnings.

Advertising Goals

The specific objectives set by a business or organization for its advertising campaigns, aimed at promoting products, services, or brand identity.