P9-5A The intangible assets section of Amato Corporation\'s balance sheet at Dec

Question

P9-5A The intangible assets section of Amato Corporation's balance sheet at December Prepare entries to record 31, 2017, is presented here. Patents ($60,000 cost less $6,000 amortization) Copyrights ($36,000 cost less $25,200 amortization) Total $54,000 10,800 $64,800 transactions related to acquisitiom and amortization of intangibles; prepare the intangible assets section and note. (LO 4, 5), AP The patent was acquired in January 2017 and has a useful life of 10 years. The copyright was acquired in January 2011 and also has a useful life of 10 years. The following cash Jan. 2 Paid $46,800 legal costs to successfully defend the patent against infringe- Jan.-June Developed a new product, incurring $230,000 in research and development transactions may have affected intangible assets during 2018. ment by another company costs. A patent was granted for the product on July 1, and its useful life is equal to its legal life. Legal and other costs for the patent were $20,000. Paid $40,000 to a quarterback to appear in commercials advertising the company's products. The commercials will air in September and October Acquired a copyright for $200,000. The copyright has a useful life and legal life of 50 years. Sept. 1 Oct. 1

Explanation / Answer

Answer a. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 2-Jan Patents                                                            Dr.            46,800    To Cash            46,800 (Record the Legal Expensed paid for defend of patent rights) Jan-June Research & Development Exp.            Dr.          230,000    To Cash          230,000 (record the research & development expenses) 1-Jul Patents                                                            Dr.            20,000    To Cash            20,000 (Record the Legal Expensed paid for defend of patent rights) 1-Sep Advertising Expenses                                Dr.            40,000    To Cash            40,000 (Record the advertising expenses) 1-Oct Copyright                                                        Dr.          200,000    To Cash          200,000 (Record the Copyright purchased) Answer b. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Dec Amortization Expenses - Patents         Dr.            12,311    To Patents            12,311 (Record the amortization expenses) Amortization Exp. = ($60,000 / 10 Years) + ($46,800 / 9 Years) + ($20,000 / 9 Years) X 6/12 Amortization Exp. = $6,000 + $5,200 + $1,111 Amortization Exp. = $12,311 31-Dec Amortization Expenses - Copyright     Dr.              4,600    To Copyright              4,600 (Record the amortization expenses) Amortization Exp. = ($36,000 / 10 Years) + ($200,000 / 50 Years) X 3/12 Amortization Exp. = $3,600 + $1,000 Amortization Exp. = $4,600 Answer c. Balance Sheet (Partial) As on Dec 31, 2018 Intangible Assets Patents          126,800 Less: Amortiation Expenses            18,311          108,489 Copyrights          236,000 Less: Amortiation Expenses            29,800          206,200 Total Intangible Assets          314,689 Answer d. Notes to Intangible Assets: Intangible Assets Section consists of Three Patents and Two Coprrights 1. Patent with a total Cost of $126,800 and being amortized in three sections: a. $60,000 over 10 Years b. $46,800 over 9 Years c. $20,000 over 9 Years 2. Copyrights with a total cost of $236,000 and being amortized in two sections: a. $36,000 over 10 Years b. $200,000 over 50 Years

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.