Intangibles: Expense and Disclosure

Munn Inc. had the following intangible account balance at December 31, 2015:

Patent

$168,000

Information relating to Munns patent and transactions involving other intangible assets during 2016 includes the following:

1. The patent was purchased from Grey Company for $192,000 on January 1, 2014, at which time the remaining legal life was 16 years. On January 1, 2016, Munn determined that the useful life of the patent was only 8 years from the date of acquisition.
2. On January 2, 2016, in connection with the purchase of a trademark from Cody Corporation, the parties entered into a noncompete agreement and a consulting contract. Munn paid Cody $800,000, of which three-quarters was for the trademark and one-quarter was for Codys agreement not to compete for a 5-year period in the line of business covered by the trademark. Munn considers the life of the trademark to be indefinite. Under the consulting contract, Munn agreed to pay Cody $50,000 annually on January 2 for 5 years. The first payment was made on January 2, 2016. The trademark is not impaired at the end of 2016.

2. Prepare the intangible assets section of Munns balance sheet at December 31, 2016.

MUNN, INC.
Intangible Assets Section of Balance Sheet
December 31, 2016
Patent
Trademark
Non-competition agreement, net of accumulated amortization
Total intangible assets