For example, Company X, a consumer products company, introduced a new product in 1960. It registered the trademark in 1960 for a small fee that was immediately expensed. Since then Company X has been very effective in promoting this trademarked brand. Consumers now pay a premium price for this recognized and superior product. A competitor offers to purchase the trademark from Company X for $300 million in cash. If Company X does not sell the trademark, Company X will not list the trademark as an asset. (Recall that the trademark's cost was $0.)
If Company X were to sell the trademark to Company Y for $300 million, Company Y will report the trademark on its balance sheet at $300 million. The reason is that there was a transaction for $300 million and Company Y's cost of the trademark was indeed $300 million.
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