Response to the following problem:
Data related to the acquisition of intangible assets during the current year ended December 31 are as follows:
a. Governmental and legal costs of $655,200 were incurred on January 4 in obtaining a patent with an estimated economic life of 12 years.
b. Goodwill arising from acquiring a business was purchased on July 1 for $8,400,000. The goodwill is estimated to have been impaired during the remainder of the year, and thus was estimated to have a value of $1,100,000 on December 31.
c. Copyrights with an estimated life of nine years were purchased for $450,000 on October 1.
Instructions
1. Record the acquisition of each intangible asset.
2. Record the December 31 adjusting entries for each intangible asset.
3. What impact will the transactions in (1) and (2) have on the statement of cash flows?