Question

E8-21 LO8-6 Computing and Reporting the Acquisition and Amortization of Three Different Intangible Assets Springer Company had three intangible assets at the end of 2020 (end of the accounting year): a. A copyright purchased on January 1, 2020, for a cash cost of $14.500. The copyright is expected to have a 10-year useful life to Springer. b. Goodwill of $65,000 from the purchase of the Hartford Company on July 1, 2019. c. A patent purchased on January 1, 2019, for $48,000. The inventor had registered the patent with the U.S. Patent and Trademark Office on January 1, 2015. Springer intends to use the patent for its remain- ing life. Required: 1. Compute the amortization of each intangible at December 31, 2020. The company does not use contra-accounts. 2. Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2020. (Assume there has been no impairment of goodwill.)

Answer 1

Please find below table useful to compute desired results: -

2 A B C D 1 Acquistion Cost Life Amortization 2 Copyright 14500 10 =B2/C2 3 Goodwill 65000 indefinite lo 4 Patent 48000 20 =B4/C4-4) Income Statement Operating Expenses: - Amortisation expense =D2+D3+D4 Balance Sheet(Partial) 11 Intangibles Assets: - 12 Copyright =B2-D2 13 Goodwill =B3-D3 14 Patent =B4-D4 15 =C12+C13+C14

D A B C 1 Acquistion Cost Life Amortization 2 Copyright $14,500.00 101 $1,450.00 3 Goodwill $65,000.00 indefinite $0.00 4. Patent $48.000.00 20 $3,000.00 Income Statement Operating Expenses: - Amortisation expense $4,450.00 Balance Sheet(Partial) 11 Intangibles Assets: - 12 Copyright $13,050.00 13 Goodwill $65,000.00 14 Patent $45,000.00 $123,050.001 15