Brush Company engaged in the following transactions at the beginning of 2016:
a. Purchased a patent (Patent A) for $70,000 that had originally been filed in January 2010. The purchase was made to protect another patent (Patent B) that the company had filed tor in January 2012 and subsequently received.
b. Purchased the rights to a novel by a bestselling novelist in exchange for 10,000 shares or $10 par value common stock selling for $60 per share. The book is expected to sell 1,500,000 copies over the next 3 years with no significant sales of the novel expected beyond 3 years.
c. Purchased the franchise to operate a terry service from the state government for $10,000. A bridge has been planned to replace the ferry, and the bridge is expected to be completed in 5 years. Brush hopes that the terry will continue as a tourist attraction, but profits are expected to be only 20% of those earned before the bridge is opened.
d. Paid $28,000 of legal costs to successfully defend the patent acquired in Transaction a.
e. Paid a race car driver $50000 to have the Brush Company name prominently displayed on the race car for 2 years.
Required:
1. Prepare the journal entries to record the preceding transactions.
2. Prepare the journal entries to record the amortization of intangible assets for 2016, if appropriate. Amortize over the legal life unless a better alternative is indicated.