Madrigal Corporation engaged in the following transactions during 2023:

a. Madrigal spent $200,000 in an unsuccessful patent defense on October 1. As a result of the decision, the patent was determined to be worthless. The carrying value on October 1 was $125,000.

b. On December 31, Madrigal paid attorney fees of $60,000 to successfully defend one of its patents. The patent expires at the end of 2026.

c. On December 31, Madrigal paid Lexi Company $250,000 for the right to exclusively market a product using the Lexi name and logo. This franchise does not expire as long as Madrigal remains in business

d. Madrigal spent $400,000 during 2023 in salaries, materials, and overhead to develop a new manufacturing process. It has applied for a patent and it believes its application will be successful.

e. Madrigal also paid Dorado Laboratories $50,000 for research and development work performed in regards to the manufacturing process referenced in “d”.

f. On January 5, 2024, Madrigal’s application for the patent referenced in “d” was granted. Legal and registration costs incurred were $100,000. The patent expires in 20 years. Madrigal believes the manufacturing process will be useful for ten years.

Requirements:

1. Prepare journal entries to record the above transactions.

2. Prepare the adjusting entries required at the end of 2024 to record amortization of any intangible assets.

Answer rating: 100% (QA)

here are the journal entries for the transactions in 2023 and the adjusting entries at the end of 20... View the full answer