Question

Acquisition and Amortization of Intangible Assets TLM Technologies had these transactions related to intangible assets during 2011 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. 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 $12,200. TLM expects to use the trademark indefinitely. Sept. 2 Paid research and development costs of $500,000. Hide 1. Prepare the journal entries necessary to record the transactions. 2011 Jan. 2 Patent 200000 Cash 200000 (Purchased patent) 2011 Jan. 5 Patent 80000 Cash 80000

Answer 1

	Date	Account Titles and explanation	Debit	Credit
	Jan,2,2011	Patent	$200,000
		Cash		$200,000
		(To record purchase of patent)
	Jan,5,2011	Patent	$80,000
		Cash		$80,000
		(To record legal fees paid for patent)
	June,29,2011	Trademark	$12,200
		Cash		$12,200
		(To record payment of registration fees for trademark)
	Sep,2,2011	Research and development expenses	$500,000
		Cash		$500,000
		(To record Research and development expenses)
	Dec,31,2011	Amortization expenses	$35,000		(280000/8)
		Patent		$35,000
		(To record patent amortization expenses)
		Balance at the end of December ,2011
		Patent	$245,000	(280000-35000)
		Trademark	$12,200