Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
a) Assume Remaining life = 10 years
Corporation purchases the patent = $36,000
Current Amortization Value (October to December)
= (Purchase Value of Patent ÷ Remaining Life) × number of months ÷ total number of months in a year
= ($36,000 ÷ 10) × 3 months ÷ 12 months
= $3,600 × 3 months ÷ 12 months
= $900
Lee Corporation deducted $900 amortization expenses in the current year.
b).Goodwill
= Assets Purchasing Value of Kay Corporation - Assets Purchasing Fair Market Value of Kay Corporation
= $510,000 - $420,000
= $90,000
Assume amortization period is = 15 years as it is for trade or business
Current Amortization Value (October to December)
= (Goodwill + Fair Market Value of Patent + Costing of 3 Years ÷ Amortization Period) × number of months ÷ total number of months in a year
= ($90,000 + $36,000 + $72,000 ÷ 15) × 3 months ÷ 12 months
= $13,200 × 3 months ÷ 12 months
= $3,300
Lee Corporation deducted $3,300 amortization expenses in the current year.
