prepare journal entries to record the transactions 571014

Aug 29, 2021 | Uncategorized

The intangible assets section of Salmiento Corporation’s balance sheet at December 31, 2010, is presented here.

Patents ($60,000 cost less $6,000 amortization)

$54,000

Copyrights ($36,000 cost less $25,200 amortization)

10,800

Total

$64,800

The patent was acquired in January 2010 and has a useful life of 10 years. The copyright was acquired in January 2004 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2011.

Jan.

2

Paid $45,000 legal costs to successfully defend the patent against infringement
by another company.

Jan.–June

Developed a new product, incurring $210,000 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 $40,000 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 $200,000. The copyright has a useful life and
legal life of 50 years.

Instructions

(a) Prepare journal entries to record the transactions.

(b) Prepare journal entries to record the 2011 amortization expense for intangible assets.

(c) Prepare the intangible assets section of the balance sheet at December 31, 2011.

(d) Prepare the note to the financial statements on Salmiento Corporation’s intangible assets as of December 31, 2011.