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Sharp Company Owns a Copyright and a Patent

question 88

Essay

Sharp Company owns a copyright and a patent.The copyright was acquired at a cost of $160,000 and the patent was purchased for $475,000.The copyright has an estimated useful life of 25 years and the patent has a 19-year estimated useful life.Both assets have estimated salvage values of zero.
Required:
1.Describe this information's effect on the income statement.Assume the assets are used for a full year.
2.Calculate the balance sheet carrying value of each asset after three years of use.
3.Explain how intangible assets have value.


Definitions:

Validating

The process of recognizing and affirming the validity or worth of an individual or a concept.

Wording Effects

The impact that the phrasing of questions or statements has on people's responses or perceptions, often studied in survey research and psychology.

Response Bias

The tendency of respondents to answer questions on a survey untruthfully or misleadingly.

Researcher Bias

The tendency for the preferences, beliefs, or prejudices of a researcher to influence the outcomes of their research.

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