16. The intangible assets section of Pride Company at Dec.31, 2010 is presented below: Intangible assets Patent ($300,000 cost less $30,000 amortization) $270,000 Franchise ($180,000 cost less $72,000 amortization) $108,000 Goodwill $150,000 $528,000 The patent was acquired in January 2010 and has a useful life of 10 years. The franchise was acquired in January 2007 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2011. Jan2 Paid $135,000 legal costs to successfully defend the patent against infringement by another company. Jan - June Developed a new product, incurring $690,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life. Aug.1 Paid for commercial advertising $125,000 for the company’s product. Oct.1 Acquired a franchise for $600,000. The franchise has a useful life of 50 years Instructions: a) Prepare journal entries to record the 2011 amortization expense. 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.
16. The intangible assets section of Pride Company at Dec.31, 2010 is presented below: Intangible assets Patent ($300,000 cost less $30,000 amortization) $270,000 Franchise ($180,000 cost less $72,000 amortization) $108,000 Goodwill $150,000 $528,000 The patent was acquired in January 2010 and has a useful life of 10 years. The franchise was acquired in January 2007 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2011. Jan2 Paid $135,000 legal costs to successfully defend the patent against infringement by another company. Jan - June Developed a new product, incurring $690,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life. Aug.1 Paid for commercial advertising $125,000 for the company’s product. Oct.1 Acquired a franchise for $600,000. The franchise has a useful life of 50 years Instructions: a) Prepare journal entries to record the 2011 amortization expense. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
16. The intangible assets section of Pride Company at Dec.31, 2010 is presented below:
Intangible assets
Patent ($300,000 cost less $30,000 amortization)
$270,000
Franchise ($180,000 cost less $72,000 amortization)
$108,000
Goodwill
$150,000
$528,000
The patent was acquired in January 2010 and has a useful life of 10 years. The franchise was
acquired in January 2007 and also has a useful life of 10 years.
The following cash transactions may have affected intangible assets during 2011.
Jan2
Paid $135,000 legal costs to successfully defend the patent against infringement by another company.
Jan - June
Developed a new product, incurring $690,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.
Aug.1
Paid for commercial advertising $125,000 for the company’s product.
Oct.1
Acquired a franchise for $600,000. The franchise has a useful life of 50 years
Instructions:
a) Prepare journal entries to record the 2011 amortization expense.
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 6 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education