1 The following transactions took place and need to be recorded on December 31,

Question

1 The following transactions took place and need to be recorded on December 31, 2017 Company paid $104,000 for research and development work performed by another company under contract. The benefits are expected to last 2 years. Company had on their books a remaining amount of unamortized patent at $252,000. The company unsuccessfully defended the patent and incurred a cost of $480,000 in the process. Since they lost the patent defense, the patent is considered worthless Company purchased exclusive rights to market a product using the franchiser's name and logo. It has an indefinite life and cost the company $400,000.00 Company applied for a patent-costs included legal of $210,000. Patent has a 20 years life and will be useful to the company for 10 years. A. B. C. D.

Explanation / Answer

Journal entries:

No. Date Account titles Debit credit A. Dec 31,2017 Research and development expense $104,000 Cash $104,000 B. Dec 31,2017 Legal fees expense $480,000 Cash $480,000 Dec 31,2017 Patent expense $252,000 Patent $252,000 C. Dec 31,2017 Franchise $400,000 Cash $400,000 D. Dec 31,2017 Patent $210,000 Cash $210,000

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