amortizing intellectual property as other income

USA Discussion in 'Technical Queries' started by allen, Dec 14, 2016.

  1. allen

    allen

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    Recently i found this in a company's book.

    company F purchased company S for $10 million. Then F thinks S worth more than $10 million, so it says $1 million of the $10 million is intellectual property right, then amortize the $1 million in 36 months as other income.
    my question is, if F thinks it is paying more to acquire S, then it should recognizes the excess amount ($1 million) as goodwill. What is the logic behind amortizing the intellectual property right as other income?

    note: I got the GL as excel format export from QuickBooks. So it only shows the amount, but not the debit credit accounts.
     
    allen, Dec 14, 2016
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