Accounting for Various Intangible Costs: Amortization, Change in Accounting EstimateMunn Inc. reported its Other noncurrent asset account balances on December 31 of Year 2 as follows.PatentAccumulated amortizationNet patentInformation relating to these Other noncurrent assets for Year 3 follows.1. The patent was purchased from Grey Company on January 2 of Year 1, when the remaining legal life was 16 years. On January 2 of Year 3, Munn determined that the remaining useful life of the patent was only six more years.2. On January 2 of Year 3, in connection with the purchase of a trademark from Cody Corp., the parties entered into a noncompete agreement. Munn paid Cody $960,000, of which 75% related to the trademark and 25% reflected Cody's agreement not to compete fora period of five years in the line of business covered by the trademark. Munn considers the life of the trademark to be indefinite.3. On January 1 of Year 3, Munn acquired all the noncash assets and assumed all liabilities of Amboy Company at a cash purchase price of $1,440,000. Munn determined that the fair value of the identifiable net assets acquired in the transaction is $960,000.4. Munn incurred the following research and development costs in Year 3.Salaries and related expenses related to the development of patents $150,000Supplies18,00024,000Allocated facility costsRequiredDec. 31, Year 2$230,40028,800$201,600a. Prepare a schedule of amortization for Year 3 showing amortization expense that applies to each intangible asset. The company amortizes intangible assets using the straight-line method.Amortization ExpensePatentNoncompete agreementTotal$$000 b. Prepare the balance sheet presentation of intangible assets for Munn on December 31 of Year 3, and the income statement presentation for the year ended December 31 of Year 3.• Note: Do not use negative signs with any of your answers.Munn Inc.Balance SheetDecember 31, Year 3Intangible assetsPatent, netTrademarkNoncompete agreement, netGoodwill$Other expensesAmortization expenseResearch and development expense0$OMunn Inc.Income StatementFor the year ended December 31, Year 30O00

Intangible assets are typically intellectual assets. Because of how intangible assets are…

Munn Inc. reported its Other noncurrent asset account balances on December 31 of Year 2 as follows. Patent Accumulated amortization Net patent Dec. 31, Year 2 $230,400 28,800 $201,600 Information relating to these Other noncurrent assets for Year 3 follows. 1. The patent was purchased from Grey Company on January 2 of Year 1, when the remaining legal life was 16 years. On January 2 of Year 3, Munn determined that the remaining useful life of the patent was only six more years. 2. On January 2 of Year 3, in connection with the purchase of a trademark from Cody Corp., the parties entered into a noncompete agreement. Munn paid Cody $960,000, of which 75% related to the trademark and 25% reflected Cody's agreement not to compete for a period of five years in the line of business covered by the trademark. Munn considers the life of the trademark to be indefinite.

Munn Inc. reported its Other noncurrent asset account balances on December 31 of Year 2 as follows. Patent Accumulated amortization Net patent Dec. 31, Year 2 $230,400 28,800 $201,600 Information relating to these Other noncurrent assets for Year 3 follows. 1. The patent was purchased from Grey Company on January 2 of Year 1, when the remaining legal life was 16 years. On January 2 of Year 3, Munn determined that the remaining useful life of the patent was only six more years. 2. On January 2 of Year 3, in connection with the purchase of a trademark from Cody Corp., the parties entered into a noncompete agreement. Munn paid Cody $960,000, of which 75% related to the trademark and 25% reflected Cody's agreement not to compete for a period of five years in the line of business covered by the trademark. Munn considers the life of the trademark to be indefinite.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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