Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

AP8-16A (Intangibles and amortization) Red Bear Ltd. purchased several intangible assets, as follows: Asset Purchase Cost Asset Purchase Cost Licence $80,000 Patent $160,000 Customer list

image text in transcribed

AP8-16A (Intangibles and amortization) Red Bear Ltd. purchased several intangible assets, as follows: Asset Purchase Cost Asset Purchase Cost Licence $80,000 Patent $160,000 Customer list 60,000 Copyright 250,000 The following information is also available: In addition to the costs listed above, there were legal fees of $12,000 associated with the licence acquisitions. The licences are valid in perpetuity, and sales of the products produced under the licences have been strong and are expected to continue at the same level for many decades. The customer lists are expected to be useful for the next six years. The patent has a legal life of 20 years, but technological changes are expected to render it worthless after about 8 years. The copyright is good for another 40 years, but nearly all the related sales are expected to occur during the next 10 years. Required a. Calculate the annual amortization expense, if any, that should be recorded for each of these intan- gible assets, assuming the straight-line method is appropriate. b. Show how the intangible assets section of the statement of financial position would be presented four years after acquisition of these assets, assuming that there has been no evidence that their values have been impaired. Assume that a full year of amortization was taken in the year of acquisition

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Reporting Und Behavioral Accounting Verhaltenswirkungen Des Berichtswesens Im Unternehmen

Authors: Andreas Taschner

2nd., 2nd. Auflage Aufl. 2019 Edition

3658234911, 978-3658234911

More Books

Students also viewed these Accounting questions

Question

How does selection differ from recruitment ?

Answered: 1 week ago