Accounting for Various Intangible Costs: Amortization, Change in Accounting Estimate Munn Inc. reported its Other noncurrent asset account balances on December 31 of Year 2 as follows.

	Dec. 31, Year 2
Patent	$345,600
Accumulated amortization	43,200
Net patent	$302,400

Information relating to these Other noncurrent assets for Year 3 follows. 1. The patent was purchased from Grey Company on January 2 of Year 1, when the remaining legal life was 16 years. On January 2 of Year 3, Munn determined that the remaining useful life of the patent was only six more years. 2. On January 2 of Year 3, in connection with the purchase of a trademark from Cody Corp., the parties entered into a noncompete agreement. Munn paid Cody $1,440,000, of which 75% related to the trademark and 25% reected Codys agreement not to compete for a period of ve years in the line of business covered by the trademark. Munn considers the life of the trademark to be indenite. 3. On January 1 of Year 3, Munn acquired all the noncash assets and assumed all liabilities of Amboy Company at a cash purchase price of $2,160,000. Munn determined that the fair value of the identiable net assets acquired in the transaction is $1,440,000. 4. Munn incurred the following research and development costs in Year 3.

Salaries and related expenses related to the development of patents	$225,000
Supplies	27,000
Allocated facility costs	36,000

Required a. Prepare a schedule of amortization for Year 3 showing amortization expense that applies to each intangible asset. The company amortizes intangible assets using the straight-line method.

b. Prepare the balance sheet presentation of intangible assets for Munn on December 31 of Year 3, and the income statement presentation for the year ended December 31 of Year 3. Note: Do not use negative signs with any of your answers.

Munn Inc. Balance Sheet December 31, Year 3 \begin{tabular}{|l|l|} \hline Intangible assets & \\ \hline Patent, net & $ \\ \hline Trademark & \\ \hline Noncompete agreement, net \\ \hline Goodwill & \\ \hline \end{tabular} Munn Inc. Income Statement For the year ended December 31, Year 3 Other expenses Amortization expense $ Research and development expense