Krelser Company had three intangible assets at the end of 2020 (end of the accounting year): a. A patent was purchased from J. Miller on January 1, 2020, for a cash cost of $5,700. When purchased, the patent had an estimated life of fifteen years. b. A trademark was registered with the federal government for $14,000. Management estimated that the trademark could be worth as much as $200,000 because it has an indefinite life. c. On January 1, 2020, computer licensing rights were purchased for $61,600. The rights are expected to have a four-year useful life to the company.
Krelser Company had three intangible assets at the end of 2020 (end of the accounting year): a. A patent was purchased from J. Miller on January 1, 2020, for a cash cost of $5,700. When purchased, the patent had an estimated life of fifteen years. b. A trademark was registered with the federal government for $14,000. Management estimated that the trademark could be worth as much as $200,000 because it has an indefinite life. c. On January 1, 2020, computer licensing rights were purchased for $61,600. The rights are expected to have a four-year useful life to the company.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Partial Balance Sheet at December 31, 2020:
Intangibles:
Total Intangibles
$
0
Transcribed Image Text:Krelser Company had three intangible assets at the end of 2020 (end of the accounting year):
a. A patent was purchased from J. Miller on January 1, 2020, for a cash cost of $5,700. When purchased, the patent had an estimated
life of fifteen years.
b. A trademark was registered with the federal government for $14,000. Management estimated that the trademark could be worth as
much as $200,000 because it has an indefinite life.
c. On January 1, 2020, computer licensing rights were purchased for $61,600. The rights are expected to have a four-year useful life to
the company.
Required:
1. Compute the acquisition cost of each Intangible asset.
Acquisition cost:
Patent
Trademark
Licensing rights
2. Compute the amortization of each Intangible for the year ended December 31, 2020.
Amortization expense
Patent
Trademark
Licensing rights
3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2020.
Partial Income Statement for 2020:
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