Question
A company that sells DVD's by sending emails to prospective customers has acquired a customer list from another company that also markets its products in
A company that sells DVD's by sending emails to prospective customers has acquired a customer list from another company that also markets its products in similar fashion. The company estimates that it will generate sales from the list for a minimum of two years and a maximum of 3 years. The company intends to add names to the list from answers to a questionnaire attached to each of the emails. This should extend the useful life of the list for another year.
Discuss how the company should account for the cost of the customer list. If the cost is capitalized, discuss the determination of the useful life over which the asset is amortized.
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