Chapter 10, Problem 10.5E

Intangibles

• LO10–1

In 2018, Bratten Fitness Company made the following cash purchases:

1. The exclusive right to manufacture and sell the X-Core workout machine from Symmetry Corporation for $200,000. Symmetry created the unique design for the machine. Bratten also paid an additional $10,000 in legal and filing fees to attorneys to complete the transaction.

2. An initial fee of $300,000 for a three-year agreement with Silver’s Gym to use its name for a new facility in the local area. Silver’s Gym has locations throughout the country. Bratten is required to pay an additional fee of $5,000 for each month it operates under the Silver’s Gym name, with payments beginning in March 2018. Bratten also purchased $400,000 of exercise equipment to be placed in the new facility.

3. The exclusive right to sell Healthy Choice, a book authored by Kent Patterson, for $25,000. The book includes healthy recipes, recommendations for dietary supplements, and natural remedies. Bratten plans to display the book at the check-in counter at its new facility, as well as make it available online.

Required:

Prepare a summary journal entry to record expenditures related to initial acquisitions.