The intangible assets section of Sappelt Company at December 31, 2017, is presen

Question

The intangible assets section of Sappelt Company at December 31, 2017, is presented below.

Patents ($90,000 cost less $9,000 amortization)                 $81,000

Franchises ($35,000 cost less $14,000 amortization)                         21,000

    Total                  $102,000

The patent was acquired in January 2017 and has a useful life of 10 years. The franchise was acquired in January 2014 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2018.

Jan. 2                     Paid $18,000 legal costs to successfully defend the patent against infringement by another company.

Jan.–June                            Developed a new product, incurring $149,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.

Sept. 1                  Paid $50,000 to an extremely large defensive lineman to appear in commercials advertising the company’s products. The commercials will air in September and October.

Oct. 1                    Acquired a franchise for $130,000. The franchise has a useful life of 50 years.      

Prepare journal entries to record the transactions above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)              

Prepare journal entries to record the 2018 amortization expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Prepare the intangible assets section of the balance sheet at December 31, 2018. (Round answers to 0 decimal places, e.g. 2,125.)

Explanation / Answer

Date General Journal Debit Credit 02-Jan Legal Fees: Patent 18000 Cash 18000 Jan - june R&D 149000 Cash 149000 01-Sep Advertising Expense 50000 Cash 50000 01-Oct franchise 130000 Cash 130000 b Amortization Expense: Patents 11000 Acculumated Amoritization: Patents 11000 90,000/10 +18,000*1/9 Amortization Expense: Copyrights 4150 Acculumalted Amoritzation: Copyrights: 4150 35,000/10+130000/50*3/12 c Patent 88000 (90000+18000-9000-11000) Franchise 146850 (130000+35000-14000-4150) Total intangible assets 234850

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