### Intangible Assets and Amortization Calculation#### Scenario:1. **Patent**: Purchased this year from Miller Co. on January 1 for a cash cost of $1,600. It has an estimated life of 8 years.2. **Trademark**: Registered with the federal government for $10,000. Management estimates the trademark could be worth as much as $240,000 due to its indefinite life.3. **Computer Licensing Rights**: Purchased this year on January 1 for $42,000, with an expected useful life of 6 years.#### Required Calculations:1. Compute the acquisition cost of each intangible asset.2. Compute the amortization of each intangible for the current year ended December 31.3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current year.---### Required Calculations:#### 1. Acquisition Cost- **Patent**: $1,600- **Trademark**: $10,000- **Computer Licensing Rights**: $42,000#### 2. Amortization Calculation for the Current Year Ended December 31The table provided for amortization expenses calculates the annual amortization as follows:| Asset Type | Acquisition Cost | Estimated Useful Life | Annual Amortization Expense ||-----------------------|------------------|-----------------------|---------------------------------|| Patent | $1,600 | 8 years | $1,600 ÷ 8 = **$200** || Trademark | $10,000 | Indefinite | **$0** (No amortization) || Computer Licensing Rights | $42,000 | 6 years | $42,000 ÷ 6 = **$7,000** |#### 3. Balance Sheet and Income Statement Reporting- **Balance Sheet**: - **Intangible Assets**: - Patent: $1,400 ($1,600 - $200) - Trademark: $10,000 - Computer Licensing Rights: $35,000 ($42,000 - $7,000)- **Income Statement**: - **Amortization Expenses**: - Patent Amortization Expense: $200 - Computer Licensing Rights Amortization Expense: $7,000 ---### Visual Explanation:The provided section includes a table showing the

Intangible assets should be amortized equally over its useful life. However if an intangible asset…

a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $1,600. When purchased, the patent had an estimated life of 8 years. b. A trademark was registered with the federal government for $10,000. Management estimated that the trademark could be worth as much as $240,000 because it has an indefinite life. c. Computer licensing rights were purchased this year on January 1 for $42,000. The rights are expected to have a six-year useful life to the company. Required: 1. Compute the acquisition cost of each intangible asset. 2. Compute the amortization of each intangible for the current year ended December 31. 3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current year. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Compute the amortization of each intangible for the current year ended December 31. (Do not round intermediate calculations.) Amortization Expenses 200 O Patent 2$ Trademark 833 Licensing Rights 2$ 7,000

a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $1,600. When purchased, the patent had an estimated life of 8 years. b. A trademark was registered with the federal government for $10,000. Management estimated that the trademark could be worth as much as $240,000 because it has an indefinite life. c. Computer licensing rights were purchased this year on January 1 for $42,000. The rights are expected to have a six-year useful life to the company. Required: 1. Compute the acquisition cost of each intangible asset. 2. Compute the amortization of each intangible for the current year ended December 31. 3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current year. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Compute the amortization of each intangible for the current year ended December 31. (Do not round intermediate calculations.) Amortization Expenses 200 O Patent 2$ Trademark 833 Licensing Rights 2$ 7,000

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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### Intangible Assets and Amortization Calculation

#### Scenario:
1. **Patent**: Purchased this year from Miller Co. on January 1 for a cash cost of $1,600. It has an estimated life of 8 years.
2. **Trademark**: Registered with the federal government for $10,000. Management estimates the trademark could be worth as much as $240,000 due to its indefinite life.
3. **Computer Licensing Rights**: Purchased this year on January 1 for $42,000, with an expected useful life of 6 years.

#### Required Calculations:
1. Compute the acquisition cost of each intangible asset.
2. Compute the amortization of each intangible for the current year ended December 31.
3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current year.

---

### Required Calculations:

#### 1. Acquisition Cost
- **Patent**: $1,600
- **Trademark**: $10,000
- **Computer Licensing Rights**: $42,000

#### 2. Amortization Calculation for the Current Year Ended December 31
The table provided for amortization expenses calculates the annual amortization as follows:

| Asset Type | Acquisition Cost | Estimated Useful Life | Annual Amortization Expense |
|-----------------------|------------------|-----------------------|---------------------------------|
| Patent | $1,600 | 8 years | $1,600 ÷ 8 = **$200** |
| Trademark | $10,000 | Indefinite | **$0** (No amortization) |
| Computer Licensing Rights | $42,000 | 6 years | $42,000 ÷ 6 = **$7,000** |

#### 3. Balance Sheet and Income Statement Reporting
- **Balance Sheet**:
- **Intangible Assets**:
- Patent: $1,400 ($1,600 - $200)
- Trademark: $10,000
- Computer Licensing Rights: $35,000 ($42,000 - $7,000)

- **Income Statement**:
- **Amortization Expenses**:
- Patent Amortization Expense: $200
- Computer Licensing Rights Amortization Expense: $7,000

---

### Visual Explanation:
The provided section includes a table showing the

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