Lara Company established a new machine for developed basketballs. As the machine is considered very advanced and valuable, the company had it patented. The following expenditures were incurred in developing and patenting the machine.

(a) special equipment that was purchased to be used solely for development of the new machine ...................... $182,000

(b) salaries and outlying benefits for engineers and research scientists 17,100

(c) testing prototype ........................... 23,600

(d) Legal fees for filing for patent ...................12,700

(e) Fees paid to government patent office ............... 2,500

(f) Drawings required by patent office to be filed with

patent application .................................. 4,700

Lara Company has chosen to amortize the patent over its legal life. At the beginning of the second year, Lara Company paid $24,000 to successfully defend the patent in an infringement suit. At the beginning of the fourth year Lara Company determined that the remaining estimated useful life of the patent was five years.

Required

Record the above transactions in general journal form for Lara Company for the first five years of the life of the patent. Include any amortization or depreciation for each period.

Discuss the recognition, measurement, impairments and disclosure of Intangible assets.