Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Brush Company engaged in the following transactions at the beginning of 2016: a. Purchased a patent (Patent A) for $70,000 that had originally been filed

Brush Company engaged in the following transactions at the beginning of 2016:

a. Purchased a patent (Patent A) for $70,000 that had originally been filed in January 2010. The purchase was made to protect another patent (Patent B) that the company had filed for in January 2012 and subsequently received.

b. Purchased the rights to a novel by a best-selling novelist in exchange for 10,000 shares of $10 par value common stock selling for $60 per share. The book is expected to sell 1,500,000 copies over the next 3 years with no significant sales of the novel expected beyond 3 years.

c. Purchased the franchise to operate a ferry service from the state government for $10,000. A bridge has been planned to replace the ferry, and the bridge is expected to be completed in 5 years. Brush hopes that the ferry will continue as a tourist attraction, but profits are expected to be only 20% of those earned before the bridge is opened.

d. Paid $28,000 of legal costs to successfully defend the patent acquired in Transaction a. e. Paid a race car driver $50,000 to have the Brush Company name prominently displayed on the race car for 2 years.

Required: 1. Prepare the journal entries to record the preceding transactions. 2. Prepare the journal entries to record the amortization of intangible assets for 2016, if appropriate. Amortize over the legal life unless a better alternative is indicated.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Rethinking Clinical Audit Psychotherapy Services In The NHS

Authors: Rachael Davenhill, Matthew Patrick

1st Edition

0415162084, 978-0415162081

More Books

Students also viewed these Accounting questions

Question

Solve the following 1,4 3 2TT 5x- 1+ (15 x) dx 5X

Answered: 1 week ago