On January 2, 2012, Fran Acquires a Business from Chuck

question 12

Multiple Choice

On January 2, 2012, 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 2012?

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

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Definitions:

Experience

The knowledge or skill acquired by direct observation, participation, or event occurrence over time.

Judgment

The ability to make considered decisions or come to sensible conclusions based on available information.

Compliance

The act of adhering to rules, standards, or laws set by governing bodies or organizational policies.

Duty

A moral or legal obligation to perform or refrain from performing a certain action; often relates to roles in jobs or society.