Problem #3: Intangible Assets
The intangible assets
section of Redeker Company at December 31, 2011, is presented below.
($70,000 cost less $7,000 amortization) $63,000
($48,000 cost less $19,200 amortization) 28,800
The patent was acquired in
January 2011 and has a useful life of 10 years.
The franchise was acquired in January 2008 and also has a useful life of
10 years. The following cash
transactions may have affected intangible assets during 2012.
Jan. 2 Paid $45,000 legal
costs to successfully defend the patent against infringement by another
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 $100,000.The franchise has a useful life of 50 years.
journal entries to record the transactions above.
journal entries to record the 2012 amortization expense.
(c) Prepare the intangible assets section of the balance sheet at
December 31, 2012