Review the following information pertaining to Denzel Company. A patent was purchased on January 2, 2018,...

Review the following information pertaining to Denzel Company.

A patent was purchased on January 2, 2018, for $39,000 when the remaining legal life was 16 years. On January 2, 2020, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition.
On January 1, 2020, Denzel Company purchased a second patent for $48,000 cash. At January 1, 2020, 6 years of the patent's legal life of 20 years had already expired.
On June 30, 2020, Denzel Company paid a firm $4,800 for a new trademark. Denzel considers the life of the trademark to be indefinite.
On November 1, 2020, Denzel Company acquired all noncash assets and assumed all liabilities of Lee Company at a cash purchase price of $72,000. Denzel determined that the fair value of the identfiable net assets acquired in the transaction is $70,200.

Note: When answering the following questions, do not round until your final answer. Round your final answer to the nearest whole number.

Required

a. What is the carrying value of intangible assets on December 31, 2020? Assume no impairment losses were recognized in prior periods.

$Answer

b. What is amortization expense for 2020?

$Answer

Expert Solution


1	Carrying Value of Patent
	The Purchase price as on Jan 2,2018	39,000
	Remaining Life			16	Years
	Amortization for 2 years		4,875	(39000/16) X 2
	Value as on Jan 2020		34,125	(39000-4875)
	New Life				8	Years
	Amortization			4,266	(34125/8)
	Carrying Value as on 31-Dec-2020	29,859	(34125-4266)

2	Second Patent Value		48,000
	Remaining Life			14	Years	(20-6)
	Amortization			3,429	(48000/14)
	Carrying Value as on 31-Dec-2020	44,571	(48000-3429)
3	Carrying Value of Trade Mark as on 31-Dec-2020	4800
	(Value remain same)
4	The fair value of Net Identifiable assets	72000
	Less:Cash Paid			70200
	Goodwill( balancing Figure)		1800



A	Carrying Value as on 31-Dec-2020
	Patent			29,859
	Second Patent		44,571
	Trademark		4,800
	Goodwill			1,800

B	Amortization Expenses(4266+3429)	7,695

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