Question: M&M Golf, Inc. was formed on July 1, 2016, when Matt McGill purchased the S&S Golf Company. S&S Golf provides video golf instruction at kiosks in shopping malls. McGill plans to integrate the instructional business into the golf equipment and accessory stores. McGill paid $770,000 cash for S&S Golf. At the time, S&S's balance sheet reported assets of $650,000 and liabilities of $200,000 (thus owners' equity was $450,000). The fair value of S&S Golf's assets is estimated to be $800,000. Included in the assets is the S&S Golf trade name with a fair value of $10,000 and a copyright on some instructional books with a fair value of $24,000. The trade name has a remaining life of 5 years and can be renewed at a nominal cost indefinitely. The copyright has a remaining life of 40 years.
a. Prepare the intangible assets section of M&M Golf, Inc. at December 31, 2016. Show supporting computations.
b. How much amortization expense is included in M&M's income for the year ended December 31, 2016? Show supporting computations.
c. Prepare the journal entry (reminder: T-account format) to record amortization expense for 2017.
d. Prepare the intangible assets section of M&M's balance sheet at December 31, 2017. Note: no impairments are required to be recorded in 2017.