Amortization of Intangibles and Effects on Statement of Cash Flows Quickster Inc. acquired a patent a number of years ago. The patent is being amortized on a straight-line basis over its estimated useful life. The company’s comparative balance sheets as of December 31, 2010 and 2009, included the following line item:

1. How much amortization expense was recorded during 2010?
2. What was the patent’s acquisition cost? When was it acquired? What is its estimated useful life? How was the acquisition of the patent reported on that year’s statement of cash flows?
3. Assume that Quickster uses the indirect method to prepare its statement of cash flows. How is the amortization of the patent reported annually on the statement of cash flows?
4. How would the sale of the patent on January 1, 2011, for $1,700,000 be reported on the 2011 statement of cash flows?

  • CreatedJanuary 12, 2012
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