Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The intangible assets section of Glover Ltd. at December 31, 2016, is presented below. Patents (60,000 cost less 6,000 amortization) 54,000 Franchises (48,000 cost less

The intangible assets section of Glover Ltd. at December 31, 2016, is presented below.

Patents (60,000 cost less 6,000 amortization) 54,000

Franchises (48,000 cost less 19,200 amortization) 28,800

Total 82,800

The patent was acquired in January 2016 and has a useful life of 10 years. The franchise was acquired in January 2013 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2017.

Jan. 2 Paid 45,000 legal costs to successfully defend the patent against infringement by another company.

Jan.-June Developed a new product, incurring 100,000 in research costs and 68,000 in development costs prior to technological feasibility. A patent was granted for the product on July 1. Its useful life is equal to its 20-year legal life.

Sept. 1 Paid 58,000 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 franchise for 100,000. The franchise has a useful life of 40 years.

Instructions

(a) Prepare journal entries to record the transactions above.

(b) Prepare journal entries to record the 2017 amortization expense.

(c) Prepare the intangible assets section of the statement of financial position at December

31, 2017.

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

Fundamentals of Financial Accounting

Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh

5th Canadian edition

1259269868, 978-1259269868

More Books

Students also viewed these Accounting questions

Question

How can you adapt good style to organization preferences?

Answered: 1 week ago

Question

8. What are the costs of collecting the information?

Answered: 1 week ago