The Family Company was expanding as a result they engaged in the following activ

Question

The Family Company was expanding as a result they engaged in the following activities beginning is 2016.

Paid $30,000 to the Major League Ballpark to have the Family name displayed on the billboard for three years.

Purchased a franchise for $20,000 to operate trolley services around the city for tourists. The trolley service is expected to be decommissioned in 4 years due to the maintenance costs, there is hope that it will remain in service.

Purchased a patent for $45,000, the patent was originally filed in 2011.

The owner of the patent was a well-known inventor and author who sold Family the rights to his novel in exchange for 5,000 shared of stock. The stock has a $5 par value and is currently selling for $25 per share. The novel is expected to sell 1,000,000 copies in the next two years.

Required:
Prepare the journal entries to record the amortization of the intangible assets for 2016. Amortize over their life unless otherwise noted.

Explanation / Answer

Journal Entry :-

Date Particulars Debit($) Credit($) Dec. 31 Amortization Expense A/c Dr. 10000 To Billboard A/c ($30000/3 year) 10000 (To Recored Amortization of Billboard) Dec. 31 Amortization Expense A/c Dr. 5000 To Trolley Service A/c ($20000/4 year) 5000 (To Recored Amortization of Trolley service) Dec. 31 Amortization Expense A/c Dr. 9000 To Patent A/c ($45000/5 year) 9000 (To Recored Amortization of Patent) Dec. 31 No Entry (No Cost can be Capitalizd)

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