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QUESTION
On September 30, Morgan, Inc. acquired all of the outstanding common stock of Pathways, Inc., for $100 million.
On September 30, Morgan, Inc. acquired all of the outstanding common stock of Pathways, Inc., for $100 million. In addition to tangible assets, Morgan recorded the following assets as a result of the acquisition: Morgan's policy is to amortize intangible assets using the straight-line method, no residual value, and a six-year useful life.Patent - $6 millionDeveloped Technology - $3 millionIn process research and development - $2 millionGoodwill - $7 million
SOLUTION:Expenses for the year include:1. Goodwill is not amortized.2. In-process research and development is not amortized.3. If a company buys another, it values the tangible and intangible...