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 beginning in 2016. Paid Sso. 00to the Maior League Ballpark to have thte Fam nme dipliyed 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 b. c. 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 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

Date Account Description Debit Credit 31-Dec Amortization Expense - Billboard             10,000 Billboard ($30,000 / 3 = $10,000)          10,000 (To record amortization of billboard) 31-Dec Amortization Expense - Trolley Service               5,000 Trolley Service ($20,000 / 4 = $5,000)            5,000 (To record amortization of Trolley service) 31-Dec Amortization Expense - Patent)               9,000 Patent ($45,000 / 5 = $9,000)            9,000 (To record amortization of Patent) 31-Dec Amortization Expense - Novel Right)             12,500 Novel Right ($25,000 / 2 = $12,500)          12,500 (To record amortization of Novel Right)

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