The intangible assets section of Sappelt Company at December 31, 2017, is presented below....
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 $130,000. The franchise has a useful life of 50 years. |
Prepare journal entries to record the transactions above.
Journal Entry:
A journal entry is a short summary of a financial transaction. In the first step of the accounting cycle, all the monetary financial transactions are reported in the journal ledger or sub-ledger by a company.
Answer and Explanation: 1
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View this answerThe journal entries to record the transactions are shown below:
| Date | Particulars | Debit ($) | Credit ($) |
|---|---|---|---|
| Jan. 2 | Legal fees-Patent | 18,000 | |
| Cash | 18,000 | ||
| Jan.... |
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