Answer:
1.$120,050
2.Copyright $1,450
Patent $3,000
3.Copyright $13,050
Goodwill $65,000
Patent $42,000
Explanation:
1.Computation of the acquisition cost of each intangible asset
SPRINGER COMPANY Income Statement for 2014(partial)
Operating expenses:
Amortization expense $4,450
SPRINGER COMPANY Balance SheetDecember 31, 2014 (partial)
Intangibles:
Copyright $13,050
Goodwill$65,000
Patent$42,000
Total $120,050
2. Computation of amortization expense of each intangible for the year ended December 31, 2014
Amortization on December 31, 2014 using thr straight-line method excluding residual value:
Amortization expense
Calculation for Copyright:
$14,500 × 1/10 = $1,450
We wont calculate for Goodwill because goodwill is not amortized because of its indefinite life.
Calculation for Patent:
$48,000 × 1/16 =$3,000
1/16 is what was remaining at time of the purchase
[Amortization expense =20 year legal life – the years used which is 4 years = 16 years remaining]
3. Calculation of how the assets and any related expenses should be reported on the balance sheet and income statement for 2014.
Income statement for 2014:
Calculation for Amortization expense: ($1,450 + $3,000) = $4,450
Springer Company Balance sheet at December 31, 2014:
Calculation for Copyright ($14,500 − $1,450) = $13,050
Goodwill $65,000
Calculation for Patent ($48,000 − $6,000) = $42,000
($3,000 amortization expense × 2 years =$6,000)
