The intangible assets section of Sappelt Company as of December 31, 2017 is presented below.

Patents ($90,000 cost minus $9,000 depreciation)             $81,000

Dealerships ($35,000 cost minus $14,000 depreciation)     21,000

Total                                                                                              $102,000

The patent was granted in January 2017 and has a useful life of 10 years. The franchise was acquired in January 2014 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets in 2018.

January 2 Paid $18,000 in legal costs to successfully defend the patent against another company's infringement.

January–June Developed a new product with research and development costs of $149,000. The patent was granted for the product on July 1. Its useful life is as long as its legal life.

September 1 Paid $50,000 to a top defence lineman to appear in ads promoting the company's products. Ads will run in September and October.

On October 1st, he bought a franchise for $130,000. The franchise's useful life is 50 years.

Required

Prepare journal entries to record the above transactions. 

Prepare journal entries to record 2018 depreciation expense. 

Prepare the intangible assets section of the balance sheet for December 31, 2018. 

Answer rating: 100% (QA)

Journal entries to record the above transactions a January 2 Paid 18000 in legal costs to successful... View the full answer