6. The Family company was expanding as a result they engaged in the following ac

Question

6. The Family company was expanding as a result they engaged in the following activities a. Paid $30,000 to the Major League Ballpark to have the Family name displayed b. Purchased a franchise for $20,000 to operate trolley services around the city for beginning in 2016. on the billboard for three years. tourists. The trolley service is expected to be decommissioned in 4 years due to Purchased a patent for $45,000 the patent was originally filed in 2011 the maintenanice cot, there is hope that it wil remain in service. c. 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 shares 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 2 years. d. Required: Prepare the journal entries to record the amortization of the intangible assets for 2016. Amortize over their legal life unless otherwise noted.

Explanation / Answer

Sr No Particulars Debit Credit A. Amortization of Advertisement Expenses $ 10,000 To Advetisement Expenses (Being Advetisement expenses incurred for the display of family name on biullboard for Three yaer at $ 30000 which means $ 10000 per year same is the amortization) B Amortization of Franchise of Trolly $5,000 To Franchise of Trolly $5,000 (Being Amoritisation of the Franchise of the Trolly by $ 5000 because the amount paid of $ 20000 will give earning for 4 Years only) C Amortization of Patent $ 4500 To Patent $ 4500 (Being Patent Amortise at $ 4500 per year i.e. $ 45000 / 10Years as his legal life) D Amortization of Book Patent $62,500 To Book Patent $62,500 (Being Amortization of $ 62500 provided on book patents as Amount Paid i.e $ 125,000 (5000 share * $ 25) for Book patent last for 2 years)

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