Question

On January 1, 2020, Grand Haven, Inc., reports net assets of $862,150 although equipment (with a four-year remaining life) having a book value of $484,000 is worth $551,750 and an unrecorded patent is valued at $45,000. Van Buren Corporation pays $779,920 on that date to acquire an 80 percent equity ownership in Grand Haven. If the patent has a remaining life of nine years, at what amount should the patent be reported on Van Buren's consolidated balance sheet at December 31, 2021

Answer 1

$35,000

Step-by-step explanation:

Calculation for what amount should the patent be reported on Van Buren's consolidated balance sheet at December 31, 2021.

Unrecorded patent is valued at $45,000

Less Amortization for 2 years (9 years remaining life) ($10,000)

(45,000/9 years*2)

Patent reported $35,000

($45,000-$10,000)

Therefore the amount of patent that should be reported on Van Buren's consolidated balance sheet at December 31, 2021 is $35,000