Munn Inc. had the following intangible account balance at December 31, 2018:1. Prepare a schedule of the expenses for 2019 relating to Munn's intangible asset balances at December 31, 2018, and transactions during 2019. 2. Prepare the intangible asset section of Munn’s balance sheet at December 31, 2019. Patent$168,000Information relating to Munn's patent and transactions involving other intangible assets during 2019 includes thefollowing:a. The patent was purchased from Grey Company for $192,000 on January 1, 2017, at which time the remain-ing legal life was 16 years. On January 1, 2019, Munn determined that the useful life of the patent was only8 years from the date of acquisition.b. On January 2, 2019, in connection with the purchase of a trademark from Cody Corporation, the partiesentered into a noncompete agreement and a consulting contract. Munn paid Cody $800,000, of whichthree-quarters was for the trademark and one-quarter was for Cody's agreement not to compete for a 5-yearperiod in the line of business covered by the trademark. Munn considers the life of the trademark to be indef-inite. Under the consulting contract, Munn agreed to pay Cody $50,000 annually on January 2 for 5 years.The first payment was made on January 2, 2019. The trademark is not impaired at the end of 2019.

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

Answered: Patent $168,000 Information relating to…

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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Munn Inc. had the following intangible account balance at December 31, 2018:

1. Prepare a schedule of the expenses for 2019 relating to Munn's intangible asset balances at December 31, 2018, and transactions during 2019. 2. Prepare the intangible asset section of Munn’s balance sheet at December 31, 2019.

Patent
$168,000
Information relating to Munn's patent and transactions involving other intangible assets during 2019 includes the
following:
a. The patent was purchased from Grey Company for $192,000 on January 1, 2017, at which time the remain-
ing legal life was 16 years. On January 1, 2019, Munn determined that the useful life of the patent was only
8 years from the date of acquisition.
b. On January 2, 2019, in connection with the purchase of a trademark from Cody Corporation, the parties
entered into a noncompete agreement and a consulting contract. Munn paid Cody $800,000, of which
three-quarters was for the trademark and one-quarter was for Cody's agreement not to compete for a 5-year
period in the line of business covered by the trademark. Munn considers the life of the trademark to be indef-
inite. Under the consulting contract, Munn agreed to pay Cody $50,000 annually on January 2 for 5 years.
The first payment was made on January 2, 2019. The trademark is not impaired at the end of 2019.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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