Question

Bluestone Company had three intangible assets at the end of the current year: A patent purchased this year from Miller Co. on January 1 for a cash cost of $7,500. When purchased, the patent had an estimated life of 15 years. A trademark was registered with the federal government for $6,500. Management estimated that the trademark could be worth as much as $170,000 because it has an indefinite life. Computer licensing rights were purchased this year on January 1 for $60,000. The rights are expected to have a five-year useful life to the company. Required: Compute the acquisition cost of each intangible asset. Compute the amortization of each intangible for the current year ended December 31. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current year.

Bluestone Company had three intangible assets at the end of the current year a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $7,500. When purchased, the patent had an estimated life of 15 years. much as $170,000 because it has an indefinite life. to the company. b. A trademark was registered with the federal government for $6,500. Management estimated that the trademark could be worth as C Computer licensing rights were purchased this year on January 1 for $60,000. The rights are expected to have a five-year useful life Required 1. Compute the acquisition cost of each intangible asset 2. Compute the amortization of each intangible for the current year ended December 31. 3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current year Complete this question by entering your answers in the tabs below Req 1 Req 2 Req 3A Req 3B Compute the acquisition cost of each intangible asset. Acquisition Cost Patent Trademark Licensing Rights Req Req 2 >

Answer 1

1. Compute the acquisition cost of each intangible asset(acquistion cost)
Patent-	$   7,500.00
Trademark-	$   6,500.00
Licensing-	$ 60,000.00
2. Compute the amortization of each intangible for the current year ended December 31(amortiztion expenses)
Patent- 7500/15 years	$      500.00
Trademark- 6500/ indefinite	$             -
Licensing Rights- = 60,000/5 years	$ 12,000.00
3. Show how these assets and any related expenses should be reported on the balance sheet and income statemen for current year. Income Statement(partial) for year ending december 31.
BLUESTONE COMPANY
Income Statement (partial)
For the year ending December 31
Amortization Expense = $500 + 12000	$ 12,500.00
4. balance sheet partial at december 31(Intagibles)
BLUESTONE COMPANY
Balance Sheet
Dec-31
Intangibles
Patent: = $7500 -500	$   7,000.00
Trademark:	$   6,500.00
Licensing Rights = $60,000 - 12000	$ 48,000.00
Total intangibles assets	$ 61,500.00
1. Compute the acquisition cost of each intangible asset(acquistion cost)
Patent-	$   7,500.00
Trademark-	$   6,500.00
Licensing-	$ 60,000.00
2. Compute the amortization of each intangible for the current year ended December 31(amortiztion expenses)
Patent- 7500/15 years	$      500.00
Trademark- 6500/ indefinite	$             -
Licensing Rights- = 60,000/5 years	$ 12,000.00
3. Show how these assets and any related expenses should be reported on the balance sheet and income statemen for current year. Income Statement(partial) for year ending december 31.
BLUESTONE COMPANY
Income Statement (partial)
For the year ending December 31
Amortization Expense = $500 + 12000	$ 12,500.00
4. balance sheet partial at december 31(Intagibles)
BLUESTONE COMPANY
Balance Sheet
Dec-31
Intangibles
Patent: = $7500 -500	$   7,000.00
Trademark:	$   6,500.00
Licensing Rights = $60,000 - 12000	$ 48,000.00
Total intangibles assets	$ 61,500.00