Fuzziwig's Candles Has Two Intangible Assets Calculate the Amount of Amortization Expense That Should Be Reported

question 115

Essay

Fuzziwig's Candles has two intangible assets.Information concerning each is provided in the following table:
$\begin{array}{lll}& \underline { \text { Goodwill } }& \underline {\text { Trademak } }\\\text { Date of purchase } & \text { June 30, 2012 } & \text { Jamuary 1, 2012 } \\\text { Cost } & \$ 500,000 & \$ 250,000 \\\text { Legal life } & \text { None } & 10 \text { years }\\\text { Useful life } & 40 \text { years } & 5\text { years }\\\end{array}$ Calculate the amount of amortization expense that should be reported for 2012.

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Definitions:

Direct Labor-Hours

The cumulative hours put in by workers who are directly engaged in the production process.

Traditional Costing System

A cost accounting method that assigns overhead costs to products based on a predetermined rate, often ignoring the causal relationship between cost objects and activities.

Activity-Based Costing

A costing methodology that assigns overhead and indirect costs to related products and services based on their usage.

Selling Price

The price at which a product or service is offered to the buyer.