Kreiser Company had three intangible assets at the end of 2010 (end of the accounting year): a. A patent purchased from J. Miller on January 1, 2010, for a cash cost of $6,100. When purchased, the patent had an estimated life of fifteen years.

Kreiser Company had three intangible assets at the end of 2010 (end of the accounting year):

a.	A patent purchased from J. Miller on January 1, 2010, for a cash cost of $6,100. When purchased, the patent had an estimated life of fifteen years.
b.	A trademark was registered with the federal government for $12,000. Management estimated that the trademark could be worth as much as $200,000 because it has an indefinite life.
c.	Computer licensing rights were purchased on January 1, 2010, for $67,000. The rights are expected to have a four-year useful life to the company.

Requirement 1:

Compute the acquisition cost of each intangible asset. (Omit the "$" sign in your response.)

	Acquisition cost
Patent	$
Trademark
Licensing rights

 

Requirement 2:

Compute the amortization of each intangible for the year ended December 31, 2010. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

	Amortization expense
Patent	$
Trademark
Licensing rights

 

Requirement 3:

Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2010. (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

Income statement for 2010:
Amortization expense	$

 

Balance sheet at December 31, 2010:
Intangibles:
Patent, net	$
Trademark
Licensing rights, net
Total Intangibles	$

 

Explanation:

2:

Amortization for the year ended December 31, 2010 (straight-line method with no residual value):

Patent: $6,100 × 1/15 years remaining = $407 amortization expense

Trademark: The trademark is not amortized due to its indefinite life.

Licensing rights: $67,000 × 1/4 years = $16,750 amortization expense

 

3:

Amortization expense = $407 + $16,750 = $17,157

Patent, net ($6,100 – $407) = 5,693