Hickory Co made a lump sum purchase of three pieces of machinery for $65,000. At the time of acquisition, Hickory paid $2,500 for an appraisal to determine the appraised value of the machinery. (These costs were necessary to complete the purchase.) The appraisal disclosed the following values:
Machine A: $35,000
Machine B: $21,000
Machine C: $14,000
What costs should Hickory assign to Machines A, B, and C, respectively?
$31,250 (A), $18,750 (B), and $12,500 (C)
$35,000 (A), $21,000 (B), and $14,000 (C)
$33,750 (A), $20,250 (B), and $13,500 (C)
$32,500 (A), $19,500 (B), and $13,000 (C)
QUESTION 13
Identify how the following item should be recognized: Legal costs incurred for an outside counsel to register a patent, which was purchased.
Goodwill
Expensed
Intangible asset with a finite life