Abacus Company Purchased a Customer Database and In-Process Research and Development

question 63

Essay

Abacus Company purchased a customer database and in-process research and development for a total of $100,000. Abacus Company uses the expected cash flow approach for estimating the fair value of these two intangibles. The appropriate interest rate is 5%. The potential future cash flows from the two intangibles, and their associated probabilities, are as follows:
Customer Database:

In-process Research and Development:

Prepare the journal entry necessary to record the purchase of the two intangibles.

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Definitions:

Axon

A thin, extended part of a neuron responsible for transmitting electrical signals from the neuron’s cell body to other neurons or muscles.

Dendrites

Branch-like extensions of neurons that receive signals from other neurons and are crucial for neural communication.

Neurons

The fundamental cells of the brain and nervous system responsible for receiving sensory input from the external world, transmitting this input, and sending motor commands to muscles.

Endocrine System

A network of glands in the body that secrete hormones into the bloodstream to regulate various body functions such as growth, metabolism, and mood.