Exercise 12-7 (Part Level Submission) In early January 2016, Blue Corporation ap

Question

Exercise 12-7 (Part Level Submission) In early January 2016, Blue Corporation applied for a trade name, incurring legal costs of $16,920. In January 2017, Blue incurred $8,720 of legal fees in a successful defense of its trade name. ? (a) Your answer is correct. Compute 2016 amortization, 12/31/16 book value, 2017 amortization, and 12/31/17 book value if the company amortizes the trade name over 10 years. (Round all answers to O decimal places, e.g. 8,564) 2016 amortization 1692 12/31/16 book value 2017 amortization 12/31/17 book value 15228 2661 21287

Explanation / Answer

SOLUTION

(A)

2016 Amortization = $16,920 / 10 years = $1,692

12/31/16 Book value = $16,920 - $1,692 = $15,228

2017 Amortization = ($15,228 + $8,720) / 9 years = $2,661

12/31/17 Book value = ($15,228 + $8,720 - $2,661) = $21,287

(B)

2017 Amortization = ($15,228 + $8,720) / 4 years = $5,987

12/31/17 Book value = ($15,228 + $8,720 - $5,987) = $17,961

(C)

2018 Amortization = $16,240 / 8 years = $2,030

12/31/18 Book value = $16,240 - $2,030 = $14,210

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