You are the tax accountant for Oh Gnome You Didn't, Inc. ("Gnome"), a C-corporation that designs and creates unique gnome gardens for its clients.On May 25^th, 2018, Gnome acquired substantially all the business assets of You Better Duck, Inc. ("Duck").Duck is a C-corporation that bathed and groomed pet ducks prior to the asset sale.It is well-known that 75% of duck aficionados own a gnome garden because ducks love to quack up at the funny-looking gnomes, so this was a very strategic business decision for Gnome.The transition was seamless, and no duck was forced to stay unkempt for a moment.

Gnome paid $1,725,000 to acquire Duck's assets, of which $690,000 was allocated to the tangible property used to bathe and groom Duck's feathery clientele.The remaining $1,035,000 of the purchase price related to Duck's intangible assets.Millie, Gnome's CFO, is familiar with how to allocate the cost of the acquired intangible assets under GAAP, and has provided the following table for you to reference

3year exclusive agreement with Ducks 'R Us, a reputable supplier of duck cleaning products 2year Er'l'lplD'fl'l'lEl'lt Agreement wilh the #1 duck whisperer in the knpwn universe Adjusted Cost Alocaon Helhod 2013 EMF Amatilation WWW, ,, 3vear exclusive agreement with ' 1: Ducks 'R Us, a reputable supplier $93,000 Tel-tee over 35' months, $93,000f36 months T of du ck cleaning pr odu cts eglnnlng wrth June 2013 months In 2013 $033 Patent forlhe Clean "Bill" of Health bad1ingprooess invented 25 000 Amortize over 102 months, $25,000,113: months * T by Donald, Buck's founder ' beginning with June 2013 months in 2013 = E exires in 16 ars 2vear Emplovment Agreement _ * with the #1 duck whisperer in the 2 00, 000 Amortlze over 24 months, $250,000,324 months 2 be 'nnin with June 2013 months in 2013 = 25 known universe El g E Goodwill Notamortizable Hot - r :Icable l'v'lillie has asked you to complete a similar table of information from an income tax perspective, and has provided an incomplete version as seen below. She is certain Gnome's tax return is likelv to be audited by the IRS, so she wants to make sure 1.rou provide proper citations that substantiate vour conclusions in the cost allocation method column