Bundle: College Accounting, Chapters 1-27, Loose-Leaf Version, 22nd + CengageNOWv2, 2 terms Printed Access Card
22nd Edition
ISBN: 9781305930421
Author: James A. Heintz, Robert W. Parry
Publisher: Cengage Learning
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Question
Chapter 18, Problem 13SPB
1.
To determine
Compute the amortization expense of patent, copy right, and franchise for the year.
2.
To determine
Journalize the amortization expense transactions related to intangible assets.
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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)
1
2
Patents
3
4 Dec. 31 Copyright Amortization (Expense)
4
Copyrights
5
6
6
7 Dec. 31 Franchise Amortization (Expense)
8
Franchise
8
9
9
II II
Intangible Long-Term Assets
Track Town Co. had the following transactions involving intangible assets:
Purchased a patent for leather soles for $10,000 and estimated its useful life to be
Jan. 1
10 years.
Purchased a copyright for a design for $15,000 with a life left on the copyright of
Apr. 1
25 years. The estimated remaining (economic) life of the copyright is five years.
Signed a five-year franchise agreement and opened a Starting Line high-tech
July 1
running shoe store. Paid $50,000 to the franchisor.
Required:
1. Using the straight-line method, calculate the amortization of the patent, copyright,
and Franchise.
a. Patent
10,000 x
b. Copyright $
c. Franchise
Feedback
2. Prepare general journal entries to record the end-of-year amortizations.
Page: 1
DOC. POST.
NO. REF.
DATE
ACCOUNT TITLE
DEBIT CREDIT
20--
Dec. 31
2
2
3
3
4 Dec. 31
4
6
6
7 Dec. 31
7
Kleen Company acquired patent rights on January 10 of Year 1 for $416,000. The patent has a useful life equal to its legal life of 8 years. On January
7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $21,000.
a. Determine the patent amortization expense for the Year 4 ended December 31.
52,000 X
Feedback
Check My Work
For intangible assets with finite lives, a company uses the straight-line method to calculate amortization. If a company successfully defends
a patent it becomes part of the cost of the patent. If the company loses a lawsuit regarding a patent infringement, then the patent is written
off.
b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization. If an amount box does not require an entry, leave it i
blank.
Feedback
$2,000 X
$2,000 X
Chapter 18 Solutions
Bundle: College Accounting, Chapters 1-27, Loose-Leaf Version, 22nd + CengageNOWv2, 2 terms Printed Access Card
Ch. 18 - Prob. 1TFCh. 18 - Prob. 2TFCh. 18 - Depreciation is a process of asset valuation; that...Ch. 18 - The straight-line method of depreciation allocates...Ch. 18 - Prob. 5TFCh. 18 - Prob. 1MCCh. 18 - Prob. 2MCCh. 18 - Prob. 3MCCh. 18 - Prob. 4MCCh. 18 - Prob. 5MC
Ch. 18 - The following costs were incurred to purchase a...Ch. 18 - Prob. 2CECh. 18 - Prob. 3CECh. 18 - Grandorf Company replaced the engine in a truck...Ch. 18 - Prepare journal entries for the following...Ch. 18 - Prob. 6CECh. 18 - Prob. 7CECh. 18 - Prob. 1RQCh. 18 - Prob. 2RQCh. 18 - Prob. 3RQCh. 18 - What is meant by the depreciable cost of a plant...Ch. 18 - Prob. 5RQCh. 18 - Prob. 6RQCh. 18 - Prob. 7RQCh. 18 - Prob. 8RQCh. 18 - Prob. 9RQCh. 18 - Prob. 10RQCh. 18 - Prob. 11RQCh. 18 - Prob. 12RQCh. 18 - Prob. 13RQCh. 18 - Prob. 14RQCh. 18 - Prob. 15RQCh. 18 - Prob. 16RQCh. 18 - Prob. 17RQCh. 18 - Prob. 18RQCh. 18 - Prob. 19RQCh. 18 - Prob. 20RQCh. 18 - Prob. 21RQCh. 18 - Prob. 22RQCh. 18 - Prob. 1SEACh. 18 - STRAIGHT-LINE, DECLINING-BALANCE, AND...Ch. 18 - UNITS-OF-PRODUCTION METHOD The truck purchased in...Ch. 18 - Prob. 4SEACh. 18 - JOURNAL ENTRIES: DISPOSITION OF PLANT ASSETS...Ch. 18 - Prob. 6SEACh. 18 - STRAIGHT-LINE, DECLINING-BALANCE,...Ch. 18 - UNITS-OF-PRODUCTION METHOD A machine is purchased...Ch. 18 - CALCULATING AND JOURNALIZING DEPRECIATION...Ch. 18 - IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE...Ch. 18 - DISPOSITION OF ASSETS: JOURNALIZING Mitchell Parts...Ch. 18 - DEPLETION: CALCULATING AND JOURNALIZING Mineral...Ch. 18 - INTANGIBLE LONG-TERM ASSETS Track Town Co. had the...Ch. 18 - Prob. 1SEBCh. 18 - STRAIGHT-LINE, DECLINING-BALANCE, AND...Ch. 18 - Prob. 3SEBCh. 18 - Prob. 4SEBCh. 18 - JOURNAL ENTRIES: DISPOSITION OF PLANT ASSETS...Ch. 18 - Prob. 6SEBCh. 18 - STRAIGHT-LINE, DECLINING-BALANCE,...Ch. 18 - UNITS-OF-PRODUCTION METHOD A machine is purchased...Ch. 18 - CALCULATING AND JOURNALIZING DEPRECIATION...Ch. 18 - IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE...Ch. 18 - DISPOSITION OF ASSETS: JOURNALIZING Mayer Delivery...Ch. 18 - DEPLETION: CALCULATING AND JOURNALIZING Mining...Ch. 18 - Prob. 13SPBCh. 18 - Prob. 1MYWCh. 18 - Creative Solutions purchased a patent from Russell...Ch. 18 - On April 1, 20-3, Kwik Kopy Printing purchased a...Ch. 18 - Prob. 1CP
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