Intangible Long-Term Assets Track Town Co. had the following transactions involving intangible assets: Jan. 1 Purchased a patent for leather soles for $13,560 and estimated its useful life to be 12 years. Apr. 1 Purchased a copyright for a design for $10,400 with a life left on the copyright of 20 years. The estimated remaining (economic) life of the copyright is five years. July 1 Signed a 6-year franchise agreement and opened a Starting Line high-tech running shoe store. Paid $65,400 to the franchisor. Required: 1. Using the straight-line method, calculate the amortization of the patent, copyright, and Franchise. a. Patent b. Copyright $ c. Franchise $ 2. Prepare general journal entries to record the end-of-year amortizations. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 20-- 1 Dec. 31 Patent Amortization (Expense) Patents 2 3 3 4 Dec. 31 Copyright Amortization (Expense) 4 Copyrights 6 7 Dec. 31 Franchise Amortization (Expense) 7 8 Franchise 8

Intangible Long-Term Assets Track Town Co. had the following transactions involving intangible assets: Jan. 1 Purchased a patent for leather soles for $13,560 and estimated its useful life to be 12 years. Apr. 1 Purchased a copyright for a design for $10,400 with a life left on the copyright of 20 years. The estimated remaining (economic) life of the copyright is five years. July 1 Signed a 6-year franchise agreement and opened a Starting Line high-tech running shoe store. Paid $65,400 to the franchisor. Required: 1. Using the straight-line method, calculate the amortization of the patent, copyright, and Franchise. a. Patent b. Copyright $ c. Franchise $ 2. Prepare general journal entries to record the end-of-year amortizations. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 20-- 1 Dec. 31 Patent Amortization (Expense) Patents 2 3 3 4 Dec. 31 Copyright Amortization (Expense) 4 Copyrights 6 7 Dec. 31 Franchise Amortization (Expense) 7 8 Franchise 8

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Pharoah Company purchases equipment on January 1, Year 1, at a cost of $267,000. The asset is expected to have a service life of 5 years and a salvage value of $20,000. (a) Compute the amount of depreciation for each of Years 1 and 2 using the straight-line depreciation method. Depreciation for Year 1 Depreciation for Year 2 %24 %24
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