Bluestone Company had three intangible assets at the end of the current year a.

Question

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 $6,000. When purchased the patent had an estimated life of 10 years. b. A trademark was registered with the federal government for $4.500. Management estimated that the trademark could be worth as much as $130,000 because it has an indefinite life c. Computer licensing rights were purchased this year on January 1 for $40,000. The rights are expected to have a five-year useful life to the company. Required 1. Compute the acquisition cost of each intangible asset Acquisition Cost Patent Trademark Licensing RightsS 6,000 4.500 40,000 2. Compute the amortization of each intangibie for the current year ended December 31. (Do not round intermediate calculations.) Amortization Expenses 800 Tracemark Licensing Rightss 8 000

Explanation / Answer

1. Acquisition cost of intangibles:

A. Patent. 6000$

B. Trademark 4500$

C. Licensing rights 40,000$

2. Amortization Schedule :

A. Patent = 6000/10= 600$

B. Trademark can't be amortized because it is having a indefinite life.

C. Licensing rights amortization = 40,000/5= 8000$

3. Amortization should be debited in income statement.

Amortization in income statement = 8600$

4. Balance sheet at 31st Dec.

I. INTANGIBLES

PATENT 6000

LESS:* DEP. (600)

NET value of patent 5400$

B. Trademark @ 4500, no amortization of intangibles assets with indefinite useful life.

C. Licensing rights 40,000$

Less:amortization 8000$

Net licensing rights = 32000$

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