The intangible asset section of the balance sheet for Eikel Company at December 31, 1997, is presented here:

The patent was acquired in January 1997 and has a useful life of 10 years. The copyright was acquired in January 1994 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 1998 :
Jan. 2 Paid \(\$ 9,000\) 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, and its useful life is equal to its legal life.
Sept. 1 Paid \(\$ 80,000\) 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 copyright for \(\$ 80,000\). The copyright has a useful life of 50 years.
\section*{Instructions}

(a) Prepare journal entries to record the transactions.

(b) Prepare journal entries to record the 1998 amortization expense.

(c) Prepare the intangible asset section of the balance sheet at December 31, 1998

(d) Prepare the notes to the financial statements on Eikel Company's intangible assets as of December 31, 1998.

Transcribed Image Text:

Patent ($70,000 cost less $7,000 amortization) Copyright ($48,000 cost less $19,200 amortization) Total $63,000 28,800 $91,800