Required: a. Compute the annual amortization expense for these items. b. Record the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model.

Required: a. Compute the annual amortization expense for these items. b. Record the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model.

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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Question

Dynamo Manufacturing paid cash to acquire the assets of an existing company. Among the assets acquired were the following items:
Patent with 4 remaining years of legal life
Goodwill
Required:
a. Compute the annual amortization expense for these items.
$ 39,800
44,000
b. Record the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Record the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model.
Note: In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, and FA for financing activity. Enter any decreases to
outflows with a minus sign. Not all cells require input. Round final answers to the nearest whole dollar amount.
DYNAMO MANUFACTURING
Horizontal Statements Model
Balance Sheet
Income Statement
Statement of Cash
Expense =
Net
Income
Flows
Event
Assets
= Liabilities +
Cash
+
Patent
+ Goodwill
Stockholders'
Equity
Revenue
91,500 +
+
||
=
+
91,500
+
+
44,000 =
+
Acquisition
Amortization expense
+
+
+
II
9,950
=
II
II

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