Reference no: EM131761077

Question: Munn Inc. had the following intangible account balance at December 31, 2015:

Patent                         $168,000

Information relating to Munn's patent and transactions involving other intangible assests during 2016 includes the following:

A. The patent was purchased from Grey Company for $192,000 on January 1, 2014, at which time the remaininglegal life was 16 years. On January 1, 2016, Munn determined that eh useful life of the patent was only 8 years fromteh date of acquisition.

B. On January 2, 2016, in conncetion withthe purcahse of a trademark from Cody Corporation, the parties entered into a noncompete agreement and a consulting contract. Munn paid Cody $800,000, of which three-quarters was for teh trademark and one-quarter was for Cody's agreement not to compete for a 5-year periiod in the line of business covered by the trademark. Munn considers the life of the trademark to be indefinite. Under the consulting contract, Munn agreed to pay Cody $50,000 annually on January 2 for 5 years. the first payment was made on January 2, 2016. The trademark is not impaired at teh end of 2016.

Required: 1. Prepare a schedule of the expenses for 2016 relating to Munn's intangible asset balances at December 31,2015, and transactions during 2016.

2. Prepare the intangible assests section of Munn's balance sheet at December 31, 2016.