Question: Determining Financial Statement Effects of Activities Related to Intangible Assets Pandey Company entered into the following transactions that potentially affect intangible assets:
(a) Soon after Pandey Company started business, in January 2008, it purchased the assets of another business for a cash lump-sum payment of $400,000. Included in the purchase price was "Goodwill, $60,000." The account balance has not changed in two years.
(b) The company purchased a patent at a cash cost of $54,600 on January 1, 2009. The patent has an estimated useful life of 13 years.
(c) In 2009, Pandey hired a director of brand development to create a marketable identity for the company's products. The director devoted the entire year to this work, at a cost to the company of $125,000.
Required: 1. Give the journal entries required in 2009.
2. For each of the intangible assets, compute amortization for the year ended December 31, 2009.