Bluestone Company had three intangible assets at the end of 2014 (end of the acc

Question

Bluestone Company had three intangible assets at the end of 2014 (end of the accounting year):

a. A patent purchased from Miller Co. on January 1, 2014, for a cash cost of $3,200. When purchased, the patent had an estimated life of eight years.

b. A trademark was registered with the federal government for $6,000. Management estimated that the trademark could be worth as much as $160,000 because it has an indefinite life.

c. Computer licensing rights were purchased on January 1, 2014, for $66,000. The rights are expected to have a six-year useful life to the company.

1. compute acquistion cost

patent, trademark, licensing rights

2. compute amorization of each intangible for year ended in dec 31, 2104

patent, trademark, licensing rights

Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2014.

please provide step to step solution so that i can refer to it and understand... also for part 3 please provide as in balance and income statement ( intangibles and total intangibles)

thanks

3.

Show how these assets and any related expenses should be reported on the balance sheet and income statement for 2014.

please provide step to step solution so that i can refer to it and understand... also for part 3 please provide as in balance and income statement ( intangibles and total intangibles)

thanks

Explanation / Answer

In the balance sheet - Under the assets heading

Only the net amount of intangibles is mentioned, amortization is not mentioned

Patent - $3,200*8=$25,600

Licensing - $66,000*11= $726,000

Trademark - $ 160,000

In the income statement - Under the expenses heading

Amortization (patent and Licensing) - $400+$11,000

Expense for trademark - $6,000

Expense for patent - $3,200

Expense for computer licensing rights - $66,000

Computation of acquisition costs Debit Credit 1-Jan-14 Patent $3,200 Cash $3,200 Paid $3,200 to purchase patent 1-Jan-14 Trademark $6,000 Cash $6,000 Paid $6,00 for registering with federal government 1-Jan-14 Computer licensing rights $66,000 Cash $66,000 Paid $66,000 to purchase licensing rights Amortization 31-Dec-14 Patent - life of 8 years $3200/8 $400 Trademark - indefinite life 0 Licensing rights $66,000/6 $11,000

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