[blueberrycpa]

NINJA Question –

Customer list

• Acquired July 1, 20X1, for $600,000

• The estimated useful life of the list is 10 years.

• There is an oral commitment to purchase the customer list at the end of 10 years for $1,000.

Answer

This intangible asset should be amortized over its life of 10 years. The amount to be amortized is the cost less the residual value, which is $1,000.

$600,000 – $1,000 = $599,000

Divide this number by 10 to get the annual amortization of $59,900.

The other choices are wrong because:

• $60,000 does not take into account the $1,000 residual value.

• $30,000 is only a half-year of amortization without the residual value.

• $29,950 is only half of the correct answer and would be correct in the year of acquisition (six months versus a whole year).

My question is why is it not amortised for half a year when its acquired in July?

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[Mamabear]

I don't think you posted the whole question because I don't see which dates it is asking about. Is it asking about the year of acquisition or another year?

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[blueberrycpa]

he following pertains to Blake Corporation's property, plant, and equipment for 20X1:

Account balances on January 1, 20X1:

Debit

---

Credit

---

Land $ 150,000

Building 1,200,000

Accumulated depreciation $263,100

Machinery and equipment 900,000

Accumulated depreciation 250,000

Automotive equipment 115,000

Accumulated depreciation 84,600

Blake Corporation also acquired the following intangible assets:

Customer list

• Acquired July 1, 20X1, for $600,000

• The estimated useful life of the list is 10 years.

• There is an oral commitment to purchase the customer list at the end of 10 years for $1,000.

This is the whole question. There is patent and land information. But guess thats irrelevant .

Can someone help?

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[blueberrycpa]

The question is What is the amortization for the customer list for 20X2?

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[Anonymous]

I'm going to say $30k

600k / 10years = 60k yearly

Since it was purchased mid year (july 1), take half of that to get $30k as amortization

Is that right?

[Anonymous]

Never mind didn't read the question fully.

[blueberrycpa]

its (600k – 1k ) / 10 yrs. That is 59900. Even I missed seeing that is got in 2011 so for 2012 entire year amortisation needs to be taken if I am right?

FAR- TBD
BEC - 75
REG - 76
AUD- TBD

[Author]

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