Kreiser Company had three intangible assets at the end of 2010 (end of the accounting year):
a.A patent purchased from J. Miller on January 1, 2010, for a cash cost of $5,640. When purchased, the patent had an estimated life of fifteen years.
b.A trademark was registered with the federal government for $10,000. Management estimated that the trademark could be worth as much as $200,000 because it has an indefinite life.
c.Computer licensing rights were purchased on January 1, 2010, for $60,000. The rights are expected to have a four-year useful life to the company.
1.Compute the acquisition cost of each intangible asset
- Patent:
- Trademark:
- Licensing rights:
2.Compute the amortization of each intangible for the year ended December 31, 2010.
- Patent:
- Trademark:
- Licensing rights:
3.Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2010.
4.Balance sheet at December 31, 2010: