Required a. Compute the annual amortization expense for these items. b. Show the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model. c. Prepare the journal entries to record the acquisition of the intangible assets and the related amortization for year
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 $32,200
Goodwill 43,700
Dynamo’s financial condition just prior to the acquisition of these assets is shown in the following statements model.
Balance Sheet Income Statement
Assets
= Liabilities +
Stockholders’
Equity Revenue − Expenses = Net Income
Statement
of Cash
Cash Flows + Patent + Goodwill
92,000 + NA + NA = NA + 92,000 NA − NA = NA NA
Required
a. Compute the annual amortization expense for these items.
b. Show the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model.
c. Prepare the
Acquisition of a company means when a company acquired or purchase a maximum share portion (more than 50%) or all outstanding shares of an anthor company for cash or non-cash transaction is known as acquisition.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
