ABC Company purchased XYZ Company. XYZ has customer lists with a fair value of $50,000. ABC spent $15,000 maintaining their own customer lists. What is the correct amount and asset account that will be recorded by ABC for the year related to customer lists? A. $50,000 IDENTIFIABLE INTANGIBLE ASSET B. $65,000 IDENTIFIABLE INTANGIBLE ASSET C. $50,000 UN-IDENTIFIABLE INTANGIBLE ASSET D. $65,000 UN-IDENTIFIABLE INTANGIBLE ASSET
I think it is C. Customer lists are intangible fixed assets
A -FMV identified
Customer lists are identifiable intangible assets. --> non-mon. assets created through time+effort. But would this 50,000 asset be considered goodwill?
I hate posting questions when I don’t have the exact answer, but this is what I do have: “The purchased customer list is an identifiable intangible because it can be sold separately from the company and it would be recorded at its fair market value, the amount paid for it in the acquisition, $50,000. The amount spent by Popular on its own lists, $15,000, would have to be expensed because internally generated intangibles are not capitalized.” So, the answer is either A or B because customer lists are IDENTIFIABLE. I just don’t know if you combine the customer lists, or not.
Guys, have a look at this. http://www.pwc.com/gx/eng/about/svcs/corporatereporting/05Solution58_15.pdf
strangedays, you really are the man. there it is…internally generated customer lists are not recognized as intangible assets, so the answer is A. Nice job KJH and Strangedays
strangedays, may I have your email? I have a couple questions that maybe you could help me out with
yancey Wrote: ------------------------------------------------------- > strangedays, you really are the man. > > there it is…internally generated customer lists > are not recognized as intangible assets, so the > answer is A. Nice job KJH and Strangedays Now I know the reason…but I fu&£D up with my previous answer.
yancey Wrote: ------------------------------------------------------- > strangedays, > > may I have your email? I have a couple questions > that maybe you could help me out with Of course, volatility00 @ yahoo dot it
So, following the link, the end of the document identifies lists bought from other companies (with other companies) as intangible assets, because they can be sold separatelly. The 15,000 incurred with maintenance is just that, a maintenance cost, like the cost of oil for your car’s engine. That cost is not making your car engine value increase. Should the list be internally generated, the costs incurred with it would be expensed as incurred.
Check this out: FASB statement 142 http://www.fasb.org/pdf/aop_FAS142.pdf
Strangedays, I sent you and email, let me know if you received it
This was a question from the mock exam.
C is my answer.
A is the revised FINAL answer.
what section is this from?
FSA, I believe this is related to BS.
I go with A and it is NOT part of goodwill. GW = a plug bankers and accountants use for all the extra stuff the company likely over paid for. The accounting term is AAP = explained + unexplained. GW goes in unexplained AAP but dont worry about this cuz it is not on CFA I think.
I go with A. You can distinctly identify the acquired list as an asset – therefore, it is IDENTIFABLE and not UNIDENTIFIABLE. You acquired the asset through a purchase so the value is very concretely established based on that transaction. So the $50k is valid. The $15k for the self maintained ‘fair value’ list cannot be recorded as an intangible asset. Like an internally developed brand, you can’t clearly assign a value to the asset and, in being conservative, you cannot record it as an asset on the balance sheet. If someone bought it from you at the fair value of $15k however, that party would be able to record the value of the asset.