Question

Problem 9-05A a-c The intangible assets section of Indigo Corporation's balance sheet at December 31, 2022, is presented here. Patents ($84,700 cost less $8,600 amortization) Copyrights ($42,500 cost less $30,700 amortization) Total $76,100 11,800 $87,900 The patent was acquired in January 2022 and has a useful life of 10 years. The copyright was acquired in January 2016 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2023. Jan. 2 Paid $45,000 legal costs to successfully defend the patent against infringement by another company. Jan.- June Developed a new product, incurring $245,500 in research and development costs. A patent was granted for the product on July 1, and its useful life is equal to its legal life. Legal and other costs for the patent were $30,000. Sept. 1 Paid $54,000 to a quarterback to appear in commercials advertising the company's products. The commercials will air in September and October. Oct. 1 Acquired a copyright for $220,000. The copyright has a useful life and legal life of 50 years.

Answer 1

1) Date Jan. 2 Accounts Title & Explanation Debit Credit Patents Legal fees) $45.000 Cash $45,000 (To record legal costs for the patent) Jan-June Reseach & Development $245,500 Cash (To record research and development costs) $245,500 July. 1 Patents $30,000 Cash (To record legal and other cost for the patent) $30.000 Sept. 1 Advertising Expense $54,000 Cash (To record commercials advertising expense) $54,000 Oct. 1 $220,000 Copyright Cash (To record acquired a copyright) $220.000 Credit 2) Date Accounts Title & Explanation Debit Dec. 31 Amortization Expense-Patents $14,220 Patents (To record amortization of patents) $14.220 Dec. 31 Amortization Expense-Copyright $5,350 Copyright (To record amortization of copyrights) $5,350 Workings: Amortization Expense-Patents: [($84,700 * 1/10) + (S45,000 * 1/9)+($30,000 * 1/20 * 6/12)] $14,220 $5,350 Amortization Expense-Copyright [($42,500 * 1/10) + (S220.000 * 1/50 * 3/12)] Pina Corporation Balance Sheet (Partial) As on December 31, 2023 Intangible Assets Patents ($159,700 cost less $22.820 amortization) Copyright ($262.500 cost less $36,050 amortization) Total intangible assets $136.880 $226,450 $363,330