Alonzo CoAcquires 3 Patents from Shaq Corp

question 86

Multiple Choice

Alonzo Co.acquires 3 patents from Shaq Corp.for a total of $360,000.The patents were carried on Shaq's books as follows: Patent AA: $5,000; Patent BB: $2,000; and Patent CC: $3,000.When Alonzo acquired the patents their fair values were: Patent AA: $20,000; Patent BB: $240,000; and Patent CC: $60,000.At what amount should Alonzo record Patent BB?

• A)$120,000
• B)$240,000
• C)$2,000
• D)$270,000

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Definitions:

Monopolistically Competitive Industry

A market structure where many firms sell products that are similar but not identical, allowing for significant differentiation and non-price competition.

Perfectly Competitive Industry

An industry characterized by many small firms producing identical products where no single firm can influence the market price.

Advertising Expenditures

The amount of money spent on promoting products, services, or brands through various media channels.

Price Discrimination

A method of setting prices in which the same provider sells nearly the same goods or services at disparate prices in different markets.