In: Accounting
Intangibles: Expense and Disclosure
Munn Inc. had the following intangible account balance at December 31, 2015:
Patent | $168,000 |
Information relating to Munn's patent and transactions involving other intangible assets during 2016 includes the following:
Required
1. Prepare a schedule of the expenses for 2016 relating to Munn's intangible asset balances at December 31, 2015, and transactions during 2016. Enter all amounts as positive numbers.
MUNN, INC. | |
Schedule of Expenses Relating to Intangible Assets | |
For the Year Ended December 31, 2016 | |
Amortization of intangibles | |
Patent | $ |
Non-competition agreement | |
Total | $ |
Consulting fee to Cody Corporation | $ |
2. Prepare the intangible assets section of Munn's balance sheet at December 31, 2016.
MUNN, INC. | |
Intangible Assets Section of Balance Sheet | |
December 31, 2016 | |
Patent | $ |
Trademark | |
Non-competition agreement, net of accumulated amortization | |
Total intangible assets | $900,000 |
Requirement 1
MUNN INC
Schedule of expenses relating to Intangible Assets
For the year ended December 31,2016
Amortization of Intangibles: |
|
Patent (notes) |
28,000 |
Non-competition agreement(notes) |
40,000 |
Total |
68,000 |
Consulting fee to body corporation |
50,000 |
Notes:
Amortization of Patent
Patent Balance 31.12.15 168,000
Life of patent(6 yr remain from 1.1.2016) 6
Amortization for 2016 (168000/6) 28,000
Amortization of non-compete agreement
Cost of noncompete (800,000*1/4) 200,000
Life of agreement 5 years
Amortization for 2016 40,000
Requirement 2
MUNN INC
Intangible Assets Section of Balance Sheet
For the year ended December 31,2016
Patent (168000 – 28000) |
140,000 |
Trademark (800,000 *3/4) |
600,000 |
Non-competition agreement (net of accumulated depreciation) *200,000-40,000 |
160,000 |
Total intangible assets |
$900,000 |