Computing and Reporting the Acquisition and Amortization of Three Different Intangible Ass...

Computing and Reporting the Acquisition and Amortization of Three Different Intangible Assets

Cheshire Company had three intangible assets at the end of 2011 (end of the accounting year):

a. A copyright purchased on January 1. 2011, for a cash cost of $12,300. The copyright is expected to have a 10-year useful life to Cheshire.

b. Goodwill of $65,000 from the purchase of the Hartford Company on July 1, 2010.

c. A patent purchased on January 1, 2010, for $39,200. The inventor had registered the patent with the U.S. Patent Office on January 1, 2006.

Required:

1. Compute the acquisition cost of each intangible asset.

2. Compute the amortization of each intangible at December 31, 2011. The company does not use contra-accounts.

3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2011. (Assume there has been no impairment of goodwill.)