Question

Munn Inc. reported other noncurrent asset account balances on December 31, 2020, as follows. Patent.... Accumulated amortization .. Net patent. ..... $192,000 (24,000) $168,000 ....................................... Transactions during 2021 and other information relating to Munn's other noncurrent assets include the following. a. The patent was purchased from Grey Company on January 2, 2019, when the remaining legal life was 16 years. On January 1, 2021, Munn determined that the remaining useful life of the patent was only eight years from the date of its acquisition. b. On January 1, 2021, in connection with the purchase of a trademark from Cody Corp., the parties entered into a noncompetition agreement. Munn paid Cody $800,000, 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. c. On January 1, 2021, Munn acquired all the noncash assets and assumed all liabilities of Amboy Company at a cash purchase price of $1,200,000. Munn determined that the fair value of the identifiable net assets ac- quired in the transaction is $800,000. d. Munn incurred the following research and development costs in 2021. ..... Salaries and related expenses related to the development of patents........ Supplies ..... Allocated facility costs ............................................ $125,000 15,000 20,000 .... Required a. Prepare a schedule of amortization for 2021 relating to Munn's intangible assets assuming straight-line amortization. Prepare the balance sheet presentation of intangible assets for Munn on December 31, 2021, and the income statement presentation for the year ended December 31, 2021. b.

Answer 1

Ans a,

Petent Purchased from Grey Compnay
Date	particulars	Amount $	Reference
02-01-2019	Patent Purchased	1,92,000	Consider Usefull life 16 Years
	Dep 2019	12,000
31-12-2019	Balance as on	1,80,000
	Dep 2020	12,000
31-12-2020	Balance as on	1,68,000	Usefull life consider now 8 years from the date of Acusition hence now only 6 years life pending
	Dep 2021	28,000
31-12-2021	Balance as on	1,40,000
	Dep 2022	28,000
31-12-2022	Balance as on	1,12,000
	Dep 2023	28,000
31-12-2023	Balance as on	84,000
	Dep 2024	28,000
31-12-2024	Balance as on	56,000
	Dep 2025	28,000
31-12-2025	Balance as on	28,000
	Dep 2026	28,000
31-12-2026	Balance as on	-

Trademarks Mark Purchased from Cody Corp
Date	particulars	Trademark having infinite life $	NDA Value $
01-01-2021	Trademark purchased	6,00,000	2,00,000
	Amortisation 2021	-	40,000
31-12-2021	Balance as on	6,00,000	1,60,000
	Amortisation 2022	-	40,000
31-12-2022	Balance as on	6,00,000	1,20,000
	Amortisation 2023	-	40,000
31-12-2023	Balance as on	6,00,000	80,000
	Amortisation 2024	-	40,000
31-12-2024	Balance as on	6,00,000	40,000
	Amortisation 2025	-	40,000
31-12-2025	Balance as on	6,00,000	-

Acquired non current assets and liability of Amboy Compnay
Date	particulars	Amount $
01-01-2021	Cash purchase price investment	12,00,000
	Less : Fair Value	8,00,000
	Goodwill	4,00,000

Internal Generated Patent
particulars	Amount $
Salaries and related expenses related to development of petant	1,25,000
supplies	15,000
Allocated facility cost	20,000
Total	1,60,000

Ans 2

Balance sheet presentation of Intangible assets
Particulars	Gross Value as on 01/01/2020	Addition	Deletion	Gross Value as on 31/12/2021	Accumulated Depriciation as on 01/01/2020	Addition	Accumulated Depriciation as on 31/12/2021	Net Balance as on 31/12/2021	Net Balance as on 31/12/2020
Purchased Petant	1,92,000	-	-	1,92,000	24,000	28,000	52,000	1,40,000	1,68,000
Trade Mark Purchased	-	60,000	-	60,000	-		-	60,000	-
NDA Agreement cost	-	2,00,000	-	2,00,000	-	40,000	40,000	1,60,000	-
internal Generated Petant	-	1,60,000	-	1,60,000	-		-	1,60,000	-
Goodwill on Purchase of Amboy	-	4,00,000	-	4,00,000	-		-	4,00,000	-
	1,92,000	8,20,000	-	10,12,000	24,000	68,000	92,000	9,20,000	1,68,000