The intangible assets section of Sappelt Company at December 31, 2014, is presented below. Patents ($70,000 cost

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The intangible assets section of Sappelt Company at December 31, 2014, is presented below.
Patents ($70,000 cost less $7,000 amortization) ........ $63,000
Franchises ($48,000 cost less $19,200 amortization) ...... 28,800
Total ......................... $91,800
The patent was acquired in January 2014 and has a useful life of 10 years. The franchise was acquired in January 2011 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2015.
Jan. 2 Paid $27,000 legal costs to successfully defend the patent against infringement by another company.
Jan.–June Developed a new product, incurring $140,000 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life.
Sept. 1 Paid $50,000 to an extremely large defensive lineman to appear in commercials advertising the company’s products. The commercials will air in September and October.
Oct. 1 Acquired a franchise for $140,000. The franchise has a useful life of 50 years.

Instructions
(a) Prepare journal entries to record the transactions above.
(b) Prepare journal entries to record the 2015 amortization expense.
(c) Prepare the intangible assets section of the balance sheet at December 31, 2015.

Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Accounting Principles

ISBN: 9781118566671

11th Edition

Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso

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