The Family Company was expanding, and as a result they engaged in the following activities beginning in 2020:a.Paid $30,000 to the Major League Ballpark to have the Family name displayed on the billboard for three years.b.Purchased a franchise for $20,000 to operate trolley services around the city for tourists. The trolley service is expected to be decommissioned in 4 years due to the maintenance costs, there is hope that it will remain in service.c.Purchased a patent for $45,000. The patent was originally filed in 2015.d.The owner of the patent was a well known inventor and author who sold Family the rights to his novel in exchange for 5,000 shares of stock. The stock has a $5 par value and is currently selling for $25 per share. The novel is expected to sell 1,000,000 copies in the next 2 years. Required: Prepare the journal entries to record the amortization of the intangible assets for 2020. Amortize over their legal life unless otherwise noted.

Intangible asset: an identifiable non-monetary asset without physical substance. An asset is a…

Answered: The Family Company was expanding, and…

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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The Family Company was expanding, and as a result they engaged in the following activities beginning in 2020:

a.	Paid $30,000 to the Major League Ballpark to have the Family name displayed on the billboard for three years.
b.	Purchased a franchise for $20,000 to operate trolley services around the city for tourists. The trolley service is expected to be decommissioned in 4 years due to the maintenance costs, there is hope that it will remain in service.
c.	Purchased a patent for $45,000. The patent was originally filed in 2015.
d.	The owner of the patent was a well known inventor and author who sold Family the rights to his novel in exchange for 5,000 shares of stock. The stock has a $5 par value and is currently selling for $25 per share. The novel is expected to sell 1,000,000 copies in the next 2 years.

Required:

Prepare the journal entries to record the amortization of the intangible assets for 2020. Amortize over their legal life unless otherwise noted.

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