A patent was acquired from another company on January 1, 2019, for $25,000.The useful life is 10 years.On April 2, 2019, the company was successful in obtaining a patent. The legal fees paid to an outside law firm were $8,400. The development costs paid to engineers who were employees of Bishop were $75,000. The useful life is 10 years.On July 1, 2019, Bishop acquired all the assets net of the liabilities of Fargo Company. The identifiable net assets’ market values at the time of purchase totaled $100,000. Bishop acknowledged the superior earnings and loyal customer following of Fargo Company. Therefore, Bishop and Fargo agreed on a total purchase price of $145,000. Any goodwill arising from the purchase is not to be amortized.On December 31, 2019, Bishop paid a consulting firm $17,000 to develop a trademark. In addition, legal fees paid in connection with the trademark were $3,000. Assume a useful life of 20 years.On August 1, 2019, Bishop acquired intangible asset with an indefinite useful life for $3,700. RequiredDetermine the amortization expense for 2019.Determine the book value of each of the intangible assets.Explain your calculations.

Amortisation is reduction in the value of intangible assets like patents…

Answered: A patent was acquired from another…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A patent was acquired from another company on January 1, 2019, for $25,000.The useful life is 10 years.
On April 2, 2019, the company was successful in obtaining a patent. The legal fees paid to an outside law firm were $8,400. The development costs paid to engineers who were employees of Bishop were $75,000. The useful life is 10 years.
On July 1, 2019, Bishop acquired all the assets net of the liabilities of Fargo Company. The identifiable net assets’ market values at the time of purchase totaled $100,000. Bishop acknowledged the superior earnings and loyal customer following of Fargo Company. Therefore, Bishop and Fargo agreed on a total purchase price of $145,000. Any goodwill arising from the purchase is not to be amortized.
On December 31, 2019, Bishop paid a consulting firm $17,000 to develop a trademark. In addition, legal fees paid in connection with the trademark were $3,000. Assume a useful life of 20 years.
On August 1, 2019, Bishop acquired intangible asset with an indefinite useful life for $3,700.

Required

Determine the amortization expense for 2019.
Determine the book value of each of the intangible assets.

Explain your calculations.

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