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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Subject: accounting
Determining Carrying Value and Amortization of Intangible Assets Review the following information pertaining to Denzel Company. 1. A patent was purchased on January 2 of Year 1 for $104,000 when the remaining legal life was 16 years. On January 2 of Year 3, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition. 2. On January 1 of Year 3, Denzel Company purchased a second patent for $128,000 cash. At January 1 of Year 3, a total of 6 years of the patent's legal life of 20 years had expired. 3. On June 30 of Year 3, Denzel Company paid a firm $12,800 for a new trademark. Denzel considers the life of the trademark to be indefinite. 4. On November 1 of Year 3, Denzel Company acquired all noncash assets and assumed all liabilities of Lee Company at a cash purchase price of $192,000. Denzel determined that the fair value of the identifiable net assets acquired in the transaction is $187,200. Required a. What is the carrying value…
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