Dynamo Manufacturing paid cash to acquire the assets of an existing company. Among the assets acquired were the following items.
Patent with 4 remaining years of legal life $31,000
Goodwill 40,600
Dynamo’s financial condition just prior to the acquisition of these assets is shown in the following statements model.
Balance Sheet Income Statement
Assets = Liabilities + Stockholders’ Equity Revenue − Expenses = Net Income Statement of Cash Flows
Cash + Patent + Goodwill
93,800 + NA + NA = NA + 93,800 NA − NA = NA NA
Compute the annual amortization expense for these items.
Show the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model.
Prepare the journal entries to record the acquisition of the intangible assets and the related amortization for year 1.
