Instructions the above transactions. usting entries required at December 31. rop
ID: 2509964 • Letter: I
Question
Instructions the above transactions. usting entries required at December 31. ropr pant, and equipment section of the company's statement of Total PP Prepare inancial position at December 31 ble assets section of Amato Corporation's balance sheet at December Prepare en SA The intangible 2017, is presented here. s 560,000 cost less $6,000 amortization) transactic acquisitie of intang intangi (LO 4, 5 ohts ($36,000 cost less $25,200 amortization) $54,000 10,800 $64,800 ) Total was acquired in January 2017 and has a useful life of 10 years. The copyright uary 2011 and also has a useful life of 10 years. The following cash was acquired in Jan ctions may have affected intangible assets during 2018. 2 Paid $46,800 legal costs to successfully defend the patent against infringe- Jan. ment by another company. Jan-June Developed a new product, incurring $230,000 in research and development Sept. 1 Paid $40,000 to a quarterback to appear in commercials advertising the Oct. 1 Acquired a copyright for $200,000. The copyright has a useful life and legal 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. company's products. The commercials will air in September and October. life of 50 years.Explanation / Answer
a. In the books of Amato Corporation:
b. Adjusting entries for amortization of intangible assets:
* 60,000 / 10 + 46,800 / 9 + 20,000 / 20 x 1/2 = 11,700
** 36,000 / 10 + 200,000 / 50 x 3/12 = 4,600
c. Balance Sheet
December 31, 2018
Intangible Assets:
Patents: ( $ 126,800 cost - $ 17,700 amortization): $ 109,100
Franchise: ( $ 236,000 cost - $ 29,800 amortization) : $ 206,200
Date Account Titles Debit Credit $ $ Jan 2 Patent 46,800 Cash 46,800 Jan-June Research and Development Expenses 230,000 Cash 230,000 July 1 Patent 20,000 Cash 20,000 Sept 1 Advertising Expense 40,000 Cash 40,000 Oct 1 Copyright 200,000 Cash 200,000