Question
The intangible assets and goodwill reported by Ivanhoe Corporation at December 31, 2020, follow: Copyrights (#1) $35,740 Less: Accumulated amortization 17,870 $ 17,870 Trademarks 50,390
The intangible assets and goodwill reported by Ivanhoe Corporation at December 31, 2020, follow:
Copyrights (#1) | $35,740 | ||||
Less: Accumulated amortization | 17,870 | $ 17,870 | |||
Trademarks | 50,390 | ||||
Goodwill | 119,060 | ||||
Total | $187,320 |
A copyright (#1) was acquired on January 1, 2019, and has a useful life of four years. The trademarks were acquired on January 1, 2017, and are expected to have an indefinite life. The company has a December 31 year end and prepares adjusting journal entries annually. The following cash transactions may have affected intangible assets and goodwill during 2021:
Jan. | 5 | Paid $6,920 in legal costs to successfully defend the trademarks against infringement by another company. | ||
July | 1 | Developed a new product, incurring $201,940 in research and $49,500 in development costs with probable future benefits. The product is expected to have a useful life of 18 years. | ||
Sept. | 1 | Paid $55,670 to a popular hockey player to appear in commercials advertising the companys products. The commercials will air in early September. | ||
Oct. | 1 | Acquired another copyright (#2) for $159,000. The new copyright has a useful life of six years. | ||
Dec. | 31 | Determined the fair value of the goodwill to be $86,270. There was no indication that the copyrights or trademarks were impaired. |
(a)
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Prepare journal entries to record the above transactions. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
Date | Account Titles and Explanation | Debit | Credit |
Jan. 5July 1Sept. 1Oct. 1Dec. 31 | |||
Jan. 5July 1Sept. 1Oct. 1Dec. 31 | |||
(To record research expense) | |||
Jan. 5July 1Sept. 1Oct. 1Dec. 31 | |||
(To record development costs) | |||
Jan. 5July 1Sept. 1Oct. 1Dec. 31 | |||
Jan. 5July 1Sept. 1Oct. 1Dec. 31 | |||
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(b)
Prepare any adjusting journal entries required at December 31. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date | Account Titles and Explanation | Debit | Credit |
Dec. 31 | |||
(To record amortization on copyrights acquired on January 1, 2019) | |||
Dec. 31 | |||
(To record amortization on copyrights acquired on October 1, 2021) | |||
Dec. 31 | |||
(To record amortization expense on development cost) | |||
Dec. 31 | |||
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(c)
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