Reference no: EM132329299
Question :
The intangible asset section of Pitchfork Company at December 31, 2017, is presented below:
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Patent A ($100,000 cost less $20,000 accum. amortization)
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$ 80,000
|
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Copyright ($48,000 cost less $19,200 accum. amortization)
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$ 28,800
|
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Goodwill - Blackstone Co.
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$100,000
|
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Total Intangibles
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$208,800
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Patent A is being amortized over its legal life. When the copyright was purchased, it had a remaining legal life of 30 years, but Pitchfork projected it would generate revenues for only 10 years.
The following cash transactions may have affected intangible assets during 2018:
Apr 1 Paid $47,250 in legal costs to successfully defend Patent A against infringement. Pitchfork determined the remaining useful life to be 12 years from April V
Dec 31 When Pitchfork acquired 100% ownership of Blackstone Co. in 2010, they recorded Goodwill on the business combination. At Dec 31, 2018, this operating segment of Pitchfork is reported as follows:
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Current Assets
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$1,20,000
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|
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Land
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$80,000
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Current liabilities
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$50,000
|
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Building
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$2,50,000
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Non-current liabilities
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$1,50,000
|
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Goodwill
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$1,00,000
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Owner's Equity
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$3,50,000
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At Dec 31, 2018, due to a change in competitive pressures, Pitchfork decides to test Goodwill for impairment. At Dec. 31", It is determined that the division's Fair Value (using the market approach) is $315,000 and the fair value of Blackstone's identifiable assets and liabilities are the same as book value except for the following: the land has a fair value of $100,000, the Building has a fair value of $275,000. *Pitchfork decides NOT to early adopt the new guidance on Goodwill Impairment.
The following cash transactions may have affected intangible assets during 2018:
Using the above information, answer each of the next (4) questions:
Determine Amortization Expense at December 31, 2018 for Patent A.