Author Question: The supplier or vendor is the person or firm from whom the merchandise or other property is ordered. ... (Read 92 times)

cabate · **on:** Jul 5, 2018

The supplier or vendor is the person or firm from whom the merchandise or other property is ordered.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Sharp Company owns a copyright and a patent. The copyright was acquired at a cost of 160,000 and the patent was purchased for 475,000. The copyright has an estimated useful life of 25 years and the patent has a 19-year estimated useful life.

Both assets have estimated salvage values of zero.
Required:
1. Describe this information's effect on the income statement. Assume the assets are used for a full year.
2. Calculate the balance sheet carrying value of each asset after THREE years of use.
3. Explain how intangible assets have value.
What will be an ideal response?

trampas · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

True

Answer to Question 2

1. The income statement will report 6,400 of amortization expense for the copyright and an additional 25,000 of amortization expense for the patent.
2. The balance sheet will carry the copyright at the unamortized amount of 140,800 and the patent at the unamortized amount of 400,000.
3. Intangible assets have value based upon the rights and privileges that accrue to the owner. For example, a patent is the right to exploit an invention in the market place for a finite period. Thus, even though intangible assets cannot be touched, they have value to generate sales.