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

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

Trotman Company had three intangible assets at the end of 2012 (end of the accounting year):

a. Computer software and Web development technology purchased on January 1, 2011. for $70,000. The technology is expected to have a four-year useful life to the company.

b. A patent purchased from Ian Zimmer on January 1, 2012. for a cash cost of $6,000. Zimmer had registered the patent with the U.S. Patent Office five years ago.

c. An internally developed trademark registered with the federal government for $13,000 on November 1, 2012. Management decided the trademark has an indefinite life.

Required:

1. Compute the acquisition cost of each intangible asset.

2. Compute the amortization of each intangible at December 31, 2012. 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 2012.