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Pacart Manufacturing paid cash to acquire the assets of an existing company. Among the assets acquired were the following items:
Patent with 5 remaining years of legal life $48,000
Goodwill 35,000
Required
a. Compute the annual amortization expense for these items if applicable.
b. Record the purchase of the intangible assets and the related amortization expense for year 1 in a horizontal statements model like the preceding one. Pacart's financial condition just prior to the purchase of these assets is shown in the following statements model. The first event is recorded as an example. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity and NA to indicate the element is not affected by the event. (Enter any decreases to account balances and cash outflows with a minus sign.)
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