Garth 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
Garth’s financial condition just prior to the purchase of these assets is shown in the following statements model:
a. Compute the annual amortization expense for these items if applicable.
b. Record the acquisition of the intangible assets and the related amortization expense for year 1 in a horizontal statements model like the preceding one.
c. Prepare the journal entries to record the acquisition of the intangible assets and the related amortization for year 1.