Hargrove Dynamics, Inc., had the following balances in its intangible asset accounts at the beginning of the

Question:

Hargrove Dynamics, Inc., had the following balances in its intangible asset accounts at the beginning of the year:

Patents .......... $65,000

Copyrights .......42,000

Goodwill .......67,500

The patents have a remaining useful life of 10 years, and the copyright has a remaining useful life of 12 years. Transactions during the year were as follows:

a. At the beginning of the year, Hargrove filed for a new patent. The costs totaled $35,000. Its useful life is estimated at 10 years.

b. Hargrove incurred R&D costs of $45,000, related to new product development. No new products have been identified.

c. Hargrove evaluated the goodwill for impairment and reduced its book value by $2,500.

d. Hargrove successfully defended its patents in court. Fees totaled $13,500.

Requirement

Show each of the transactions in the accounting equation, including any adjustments that would need to be made for the year-end financial statements. Then prepare the intangible assets section of the balance sheet at year end.

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