The intangible assets and goodwill reported by Ghani Corporation at December 31, 2017, follow:
Copyrights.......................................$36,000..............................
Less: Accumulated amortization.......18,000................$ 18,000
Trademarks......................................................................54,000
Goodwill.......................................................................125,000
Total............................................................................$197,000
A copyright (#1) was acquired on January 1, 2016, and has a useful life of four years. The trademarks were acquired on January 1, 2014, 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 2018:
Jan. 5 Paid $7,000 in legal costs to successfully defend the trademarks against infringement by another company.
July 1 Developed a new product, incurring $210,000 in research and $50,000 in development costs with probable future benefits. The product is expected to have a useful life of 20 years.
Sept. 1 Paid $60,000 to a popular hockey player to appear in commercials advertising the company's products. The commercials will air in early September.
Oct. 1 Acquired another copyright (#2) for $180,000. The new copyright has a useful life of four years.
Dec. 31 Determined the recoverable amount of the goodwill to be $90,000. There was no indication that the copyrights or trademarks were impaired.
Instructions
(a) Prepare journal entries to record the transactions.
(b) Prepare any adjusting journal entries required at December 31.
(c) Show the presentation of the intangible assets and goodwill on the statement of financial position at December 31, 2018.