Question

A lawn service company sold for $125,000. The tangible assets amounted to the lawn equipment valued at $48,000. The intangible assets were the customer base and the company's good reputation.

What is the value of the intangible assets?
a. $173,000
b. $77,000
c. $48,000
d. $38,500

Answer 1

The value of the intangible assets is $77,000 (option b).

Step-by-step explanation:

The value of the intangible assets is $77,000 (option b).

In the given scenario, the tangible assets of the lawn service company are valued at $48,000, which includes the lawn equipment. Therefore, the remaining value after considering the tangible assets from the total sale price of $125,000 would represent the value of the intangible assets.

Intangible assets are non-physical assets that provide long-term economic value to a company. In this case, the intangible assets include the customer base and the company's good reputation. These assets are not physically tangible but still hold value as they contribute to the company's profitability and success.

So, the value of the intangible assets is $125,000 - $48,000 = $77,000.