P9-7B The intangible assets section of Willingham Company at December 31, 2015,
ID: 2563360 • Letter: P
Question
P9-7B
The intangible assets section of Willingham Company at December 31, 2015, is presented below.
Patents (100,000 cost less 10,000 amortization) 90,000
Copyrights (60,000 cost less 24,000 amortization) 36,000
Total 126,000
The patent was acquired in January 2015 and has a useful life of 10 years. The copyright was acquired in January 2012 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2016.
Jan 2. Paid $36,000 legal costs to successfully defend the patent against infringement by another company
Jan.-June Developed a new product, incurring 230,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1 Paid 125,000 to an X-Games start to appear in commercials advertising the company's products. The commercials will air in September and October.
Oct. 1 Acquired a copyright for 300,000. Copyright has a useful life of 50 years.
a) prepare journal entries to record the transactions above.
b) Prepare journal entries to record the 2016 amortization expense for intangible assets.
Explanation / Answer
SOLUTION
(A)
(B)
Date Accounts title and Explanations Debit ($) Credit ($) Jan.2 Legal Fees -Patent 36,000 Cash 36,000 (To record the payment of legal fees for Patent) Jan-June Research and Development Expense 230,000 Cash 230,000 (To record the payment of Research and Development Expense) Sept. 1 Advertising Expense 125,000 Cash 125,000 (To record the Advertising Expense) Oct.1 Copyright 300,000 Cash 300,000 (To record the acquisition of Copyright)Related Questions
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