The intangible assets section of Ghani Corporation's balance sheet at December 31, 2016, is as follows: Copyright

Question:

The intangible assets section of Ghani Corporation's balance sheet at December 31, 2016, is as follows:

Less: Accumulated amortization.........24,000....................$ 12,000

Trademark.................................................................52,000

Goodwill.................................................................150,000

Total.....................................................................$214,000

The copyright was acquired in January 2015 and has an estimated useful life of three years. The trademark was acquired in January 2010 and is expected to have an indefinite useful life. The following cash transactions may have affected intangible assets during 2017:

Jan. 2 Paid $7,000 in legal costs to successfully defend the trademark against infringement by another company.

July 1 Developed a new product, incurring $275,000 in research costs and $50,000 in development costs. A patent was granted for the product on July 1, and its useful life is equal to its legal life.

Aug. 1 Paid $45,000 to a popular hockey player to appear in commercials advertising the company's products. The commercials will air in September and October.

Oct. 1 Acquired a second copyright for $168,000. The new copyright has an estimated useful life of six years.

Dec. 31 Recorded annual amortization.

Instructions

(a) Prepare journal entries to record the transactions.

(b) Show how the intangible assets and goodwill will be presented on the balance sheet at December 31, 2017.

Taking It Further

Since intangible assets do not have physical substance, why are they considered to be assets?

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...