Patent $168,000 Information relating to Munn's patent and transactions involving other intangible assets during 2019 includes the following: a. The patent was purchased from Grey Company for $192,000 on January 1, 2017, at which time the remain- ing legal life was 16 years. On January 1, 2019, Munn determined that the useful life of the patent was only 8 years from the date of acquisition. b. On January 2, 2019, 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 Cody's 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 indef- inite. 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, 2019. The trademark is not impaired at the end of 2019.
Patent $168,000 Information relating to Munn's patent and transactions involving other intangible assets during 2019 includes the following: a. The patent was purchased from Grey Company for $192,000 on January 1, 2017, at which time the remain- ing legal life was 16 years. On January 1, 2019, Munn determined that the useful life of the patent was only 8 years from the date of acquisition. b. On January 2, 2019, 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 Cody's 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 indef- inite. 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, 2019. The trademark is not impaired at the end of 2019.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 8P
Related questions
Question
100%
Munn Inc. had the following intangible account balance at December 31, 2018:
1. Prepare a schedule of the expenses for 2019 relating to Munn's intangible asset balances at December 31, 2018, and transactions during 2019. 2. Prepare the intangible asset section of Munn’s balance sheet at December 31, 2019.
Transcribed Image Text:Patent
$168,000
Information relating to Munn's patent and transactions involving other intangible assets during 2019 includes the
following:
a. The patent was purchased from Grey Company for $192,000 on January 1, 2017, at which time the remain-
ing legal life was 16 years. On January 1, 2019, Munn determined that the useful life of the patent was only
8 years from the date of acquisition.
b. On January 2, 2019, 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 Cody's 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 indef-
inite. 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, 2019. The trademark is not impaired at the end of 2019.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning