The following information relates to the intangible assets of University Testing Services (UTS): a. On January 1,

Question:

The following information relates to the intangible assets of University Testing Services (UTS):

a. On January 1, 2012, UTS completed the purchase of Heinrich Corporation for $3,000,000 in cash. The fair value of the net identifiable assets of Heinrich was $2,700,000.

b. Included in the assets purchased from Heinrich was a patent valued at $90,000. The original legal life of the patent was 20 years; there are 12 years remaining, but UTS believes the patent will be useful for only eight more years.

c. UTS acquired a franchise on July 1, 2012, by paying an initial franchise fee of $350,000. The contractual life of the franchise is 10 years.

Required:

1. Record amortization expense for the intangible assets at December 31, 2012.

2. Prepare the intangible asset section of the December 31, 2012, balance sheet.

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