E9-14 (Algo) Computing and Reporting the Acquisition and Amortization of Three Different IntangibleAssets [LO 9-6]Bluestone Company had three intangible assets at the end of the current year:a. A patent purchased this year from Miller Company on January 1 for a cash cost of $6,400. When purchased, the patent had anestimated life of 16 years.b. A trademark was registered with the federal government for $3,500. Management estimated that the trademark could be worth asmuch as $110,000 because it has an indefinite life.c. Computer licensing rights were purchased this year on January 1 for $30,000. The rights are expected to have a five-year useful lifeto 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 313. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the currentyear.

1. Acquisition Cost of Each Intangible AssetPatent: The acquisition cost is the cash paid for it,…

Answered: E9-14 (Algo) Computing and Reporting…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 8P

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The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining legal life of twelve years is bought, and Hanna expects to be able to use it for six years. It is purchased at a cost of $48,000. B. A copyright with a remaining life of thirty years is purchased, and Hanna expects to be able to use it for ten years. It is purchased for $70,000. Determine the annual amortization amount for each intangible asset.
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Lake Company, organized in 2020, has the following transactions related to intangible assets in that year. Lake Company uses the calendar year for financial reporting. 1/1/2020 Purchased patent (9-year life) $540,000 4/1/2020 Purchased trademarks (indefinite life) 240,000 7/1/2020 Purchased copyright on artwork; expiration date 7/1/2035 345,000 12/31/2020 Research and development costs 217,000 Enter your answers below in whole dollars without a $ sign (e.g., xxx). a. How much expense will Lake Company recognize in 2020 due to the purchased patent? b. How much expense will Lake Company recognize in 2020 due to the purchased trademarks? c. How much expense will Lake Company recognize in 2020 due to the purchased copyright? d. How much expense will Lake Company recognize in 2020 due to its Research and development? e. Based on the above, what is the net book value of total intangible assets that Lake Company's balance sheet will show on Dec. 31, 2020?

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