Munn Inc. had the following intangible account balance at December 31, 2015:
Patent.......$168,000
Information relating to Munn's patent and transactions involving other intangible assets during 2016 includes the following:
a. The patent was purchased from Grey Company for $ 192,000 on January 1, 2014, at which time the remaining legal life was 16 years. On January 1, 2016, Munn determined that the useful life of the patent was only 8 years from the date of acquisition.
b. On January 2, 2016, in connection with the purchase of a trademark from Cody Corporation, the parties entered into a non-compete agreement and a consulting contract. Munn paid Cody $800,000, of which three quarters was for the trademark and one quarter was for Cody's agreement not to compete for a 5-year period in the line of business covered by the trademark. Munn considers the life of the trademark to be indefinite. Under the consulting contract, Munn agreed to pay Cody $50,000 annually on January' 2 for 5 years. The first payment was made on January 2, 2016. The trademark is not impaired at the end of 2016.
Required:
1. Prepare a schedule: of the expenses for 2016 relating to Munn's intangible asset balances at December 31, 2015, and transactions during 2016.
2. Prepare the intangible assets section of Munn's balance sheet at December 31, 2016.