In: Accounting
The intangible assets section of Pronghorn Corporation’s balance sheet at December 31, 2022, is presented here.
Patents ($83,100 cost less $7,400 amortization) |
$75,700 |
|
Copyrights ($37,000 cost less $23,100 amortization) |
13,900 |
|
Total |
$89,600 |
The patent was acquired in January 2022 and has a useful life of 10
years. The copyright was acquired in January 2016 and also has a
useful life of 10 years. The following cash transactions may have
affected intangible assets during 2023.
Jan. | 2 | Paid $63,000 legal costs to successfully defend the patent against infringement by another company. | |
Jan.– | June | Developed a new product, incurring $233,000 in research and development 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. | |
Sept. | 1 | Paid $68,000 to a quarterback to appear in commercials advertising the company’s products. The commercials will air in September and October. | |
Oct. | 1 | Acquired a copyright for $209,000. The copyright has a useful life and legal life of 50 years |
(b)
Prepare journal entries to record the 2023 amortization expense for intangible assets. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date |
Account Titles and Explanation |
Debit |
Credit |
---|---|---|---|
Dec. 31 |
|||
(To record amortization of patents) |
|||
Dec. 31 |
|||
|
|
||
(To record amortization of copyrights) |
working | ||||
Date | Accounts titke | Dr | Cr | |
2-Jan | Patent | $63,000 | ||
Cash | $63,000 | |||
Jan-June | R &D | $20,000 | ||
Cash | $20,000 | |||
1-Jul | Patent | $20,000 | ||
Cash | $20,000 | |||
1-Sep | Adverisng expenses | $68,000 | ||
Cash | $68,000 | |||
1-Oct | Copyright | $209,000 | ||
Cash | $209,000 | |||
Ans b | Amortization expenses-Patent | 16310 | ||
Accumulated Amortization-Patent | 16310 | |||
(83100/10)+(63000/9)+(20000/10*1/2) | ||||
Amortization expenses-Copyright | 4745 | |||
Accumulated Amortization-Copyright | 4745 | |||
(37000/10)+(209000/50*3/12) | ||||
Note instead of Acc Amortization -Patent we can use Patent as accounts title | ||||
Instead of Accumulated amortization-copyright we can use copyright | ||||
If any doubt please comment |