because it measures the value of specifically identifiable intangible assets.

EXERCISES  1.   Alonzo Co. acquires 3 patents from Shaq Corp. for a total of $360,000. The patents were carried on Shaq’s books as follows: Patent AA: $5,000; Patent BB: $2,000; and Patent CC: $3,000. When Alonzo acquired the patents their fair market values were: Patent AA: $20,000; Patent BB: $240,000; and Patent CC: $60,000. At what amount should Alonzo record Patent BB?a.   $120,000b.   $240,000c.   $2,000d.   $270,000 2..Jeff Corporation purchased a limited-life intangible asset for $120,000 on May 1, 2008. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2010?a.   $    -0-b.   $24,000c.   $32,000d.   $36,000 3.         Rich Corporation purchased a limited-life intangible asset for $210,000 on May 1, 2008. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2010?a.   $    -0-.b.   $42,000c.   $56,000d.   $63,000 4.. Thompson Company incurred research and development costs of $100,000 and legal fees of $40,000 to acquire a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Thompson record as Patent Amortization Expense in the first year?a.   $0.b.   $  4,000.c.   $  7,000.d.   $14,000.            5.  ELO Corporation purchased a patent for $90,000 on September 1, 2008. It had a useful life of 10 years. On January 1, 2010, ELO spent $22,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2010?a.   $20,600.b.   $20,000.c.   $18,800. d.   $15,600.***********************************************

Intangible assets are rights, privileges, and competitive advantages that do not possess physical substance. Intangible assets are categorized as having either a limited life or an indefinite life. Common types of intangibles: • Patents • Copyrights • Franchises or licenses • Trademarks and trade names • Goodwill Intangible assets are typically amortized on a straight - line basis.