College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 18, Problem 13SPA
INTANGIBLE LONG-TERM ASSETS Track Town Co. had the following transactions involving intangible assets:
| Jan. | 1 | Purchased a patent for leather soles for $10,000 and estimated its useful life to be 10 years. |
| Apr. | 1 | Purchased a copyright for a design for $15,000 with a life left on the copyright of 25 years. The estimated remaining (economic) life of the copyright is five years. |
| July | 1 | Signed a five-year franchise agreement and opened a Starting Line high-tech running shoe store. Paid $50,000 to the franchisor. |
REQUIRED
- 1. Using the straight-line method, calculate the amortization of the patent, copyright, and franchise.
- 2. Prepare general
journal entries to record the end-of-year amortizations.
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Intangible Long-Term Assets
Track Town Co. had the following transactions involving intangible assets:
Jan. 1 Purchased a patent for leather soles for $13,560 and estimated its useful life to be 12 years.
Apr. 1 Purchased a copyright for a design for $10,400 with a life left on the copyright of 20 years. The estimated remaining (economic) life of the copyright is five years.
July 1 Signed a 6-year franchise agreement and opened a Starting Line high-tech running shoe store. Paid $65,400 to the franchisor.
Required:
1. Using the straight-line method, calculate the amortization of the patent, copyright, and Franchise.
a. Patent
b. Copyright $
c. Franchise $
2. Prepare general journal entries to record the end-of-year amortizations.
Page: 1
DOC. POST.
NO. REF.
DATE
ACCOUNT TITLE
DEBIT CREDIT
20--
1
Dec. 31
Patent Amortization (Expense)
1
2
Patents
3
4 Dec. 31 Copyright Amortization (Expense)
4
Copyrights
5
6
6
7 Dec. 31 Franchise Amortization (Expense)
8
Franchise
8
9
9
II II
a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $1,600. When purchased, the patent had an estimated
life of 8 years.
b. A trademark was registered with the federal government for $10,000. Management estimated that the trademark could be worth as
much as $240,000 because it has an indefinite life.
c. Computer licensing rights were purchased this year on January 1 for $42,000. The rights are expected to have a six-year useful life
to the company.
Required:
1. Compute the acquisition cost of each intangible asset.
2. Compute the amortization of each intangible for the current year ended December 31.
3. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current
year.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req 3A
Req 3B
Compute the amortization of each intangible for the current year ended December 31. (Do not round intermediate
calculations.)
Amortization…
TLM Technologies had these transactions related to intangible assets during the year.
Jan. 2
Purchased a patent from Luna Industries for $200,000. The remaining legal life of the patent is 15 years, and TLM expects the patent to be useful for 8 years.
Jan. 5
Paid legal fees in a successful legal defense of the patent of $80,000.
June 29
Registered a trademark with the federal government. Registration costs were $11,800. TLM expects to use the trademark indefinitely.
Sept. 2
Paid research and development costs of $500,000.
Required:
1. Prepare the journal entries necessary to record the transactions. If no entry is required, select "No entry required" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank.
Jan. 2
fill in the blank 3a5c77f4ffe0ff9_2
fill in the blank 3a5c77f4ffe0ff9_3
fill in the blank 3a5c77f4ffe0ff9_5
fill in the blank 3a5c77f4ffe0ff9_6
Jan. 5
fill in the blank 3a5c77f4ffe0ff9_8
fill in the blank…
Chapter 18 Solutions
College Accounting, Chapters 1-27
Ch. 18 - Prob. 1TFCh. 18 - Prob. 2TFCh. 18 - Depreciation is a process of asset valuation; that...Ch. 18 - The straight-line method of depreciation allocates...Ch. 18 - Prob. 5TFCh. 18 - Prob. 1MCCh. 18 - Prob. 2MCCh. 18 - Prob. 3MCCh. 18 - Prob. 4MCCh. 18 - Prob. 5MC
Ch. 18 - The following costs were incurred to purchase a...Ch. 18 - Prob. 2CECh. 18 - A machine costing 350,000 has a salvage value of...Ch. 18 - Grandorf Company replaced the engine in a truck...Ch. 18 - Prepare journal entries for the following...Ch. 18 - Prob. 6CECh. 18 - Prob. 7CECh. 18 - Prob. 1RQCh. 18 - Prob. 2RQCh. 18 - Prob. 3RQCh. 18 - What is meant by the depreciable cost of a plant...Ch. 18 - Prob. 5RQCh. 18 - Prob. 6RQCh. 18 - Prob. 7RQCh. 18 - For assets acquired after 1986, but before...Ch. 18 - Prob. 9RQCh. 18 - Prob. 10RQCh. 18 - Prob. 11RQCh. 18 - Prob. 12RQCh. 18 - Prob. 13RQCh. 18 - Prob. 14RQCh. 18 - Prob. 15RQCh. 18 - Prob. 16RQCh. 18 - Prob. 17RQCh. 18 - Prob. 18RQCh. 18 - Prob. 19RQCh. 18 - Prob. 20RQCh. 18 - Prob. 21RQCh. 18 - Prob. 22RQCh. 18 - Prob. 23RQCh. 18 - Prob. 1SEACh. 18 - STRAIGHT-LINE, DECLINING-BALANCE, AND...Ch. 18 - UNITS-OF-PRODUCTION METHOD The truck purchased in...Ch. 18 - Prob. 4SEACh. 18 - JOURNAL ENTRIES: DISPOSITION OF PLANT ASSETS...Ch. 18 - Prob. 6SEACh. 18 - STRAIGHT-LINE, DECLINING-BALANCE,...Ch. 18 - UNITS-OF-PRODUCTION METHOD A machine is purchased...Ch. 18 - CALCULATING AND JOURNALIZING DEPRECIATION...Ch. 18 - IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE...Ch. 18 - DISPOSITION OF ASSETS: JOURNALIZING Mitchell Parts...Ch. 18 - DEPLETION: CALCULATING AND JOURNALIZING Mineral...Ch. 18 - INTANGIBLE LONG-TERM ASSETS Track Town Co. had the...Ch. 18 - Prob. 1SEBCh. 18 - STRAIGHT-LINE, DECLINING-BALANCE, AND...Ch. 18 - Prob. 3SEBCh. 18 - Prob. 4SEBCh. 18 - JOURNAL ENTRIES: DISPOSITION OF PLANT ASSETS...Ch. 18 - Prob. 6SEBCh. 18 - STRAIGHT-LINE, DECLINING-BALANCE,...Ch. 18 - UNITS-OF-PRODUCTION METHOD A machine is purchased...Ch. 18 - CALCULATING AND JOURNALIZING DEPRECIATION...Ch. 18 - IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE...Ch. 18 - DISPOSITION OF ASSETS: JOURNALIZING Mayer Delivery...Ch. 18 - DEPLETION: CALCULATING AND JOURNALIZING Mining...Ch. 18 - Prob. 13SPBCh. 18 - Prob. 1MYWCh. 18 - Creative Solutions purchased a patent from Russell...Ch. 18 - On April 1, 20-3, Kwik Kopy Printing purchased a...Ch. 18 - Prob. 1CP
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- The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining legal life of twelve years is bought, and Hanna expects to be able to use it for six years. It is purchased at a cost of $48,000. B. A copyright with a remaining life of thirty years is purchased, and Hanna expects to be able to use it for ten years. It is purchased for $70,000. Determine the annual amortization amount for each intangible asset.arrow_forwardThe following intangible assets were purchased by Goldstein Corporation: A. A patent with a remaining legal life of twelve years is bought, and Goldstein expects to be able to use it for seven years. B. A copyright with a remaining life of thirty years is purchased, and Goldstein expects to be able to use it for ten years. For each of these situations, determine the useful life over which Goldstein will amortize the intangible assets.arrow_forwardAkron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual value is 15,000. Akron estimates that the asset has a service life of 5 years. Calculate the depreciation expense using the sum-of-the-years-digits method for Years 1 and 2 of the assets life.arrow_forward
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