Amortization of Intangibles Vinay Company purchases several intangible assets, as follows:

In addition to the purchase cost of each asset, legal fees associated with the acquisition of the license are $44,000. Although the patent has a legal life of 20 years, technological changes are expected to render it worthless after about 5 years. The copyright is good for another 20 years, but nearly all of the related sales are expected to occur during the next 4 years. The license is good in perpetuity, and sales under the license are expected to continue at the same level for many decades.

a. Compute the annual amortization, if any, for each of Vinay’s intangible assets.

b. Show the presentation of the Intangible Asset section of Vinay’s balance sheet prepared at the end of the third year after acquisition of the intangible assets.

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Asset Patent Copyright License Cost $ 50,000 200,000 920,000