Question

Exercise 9-9 a-b Ivanhoe Corporation has the following selected transactions during the year ended December 31, 2018: Jan. 1 Purchased a copyright for $112,260 cash. The copyright has a useful life of six years and a remaining legal life of 30 years. Mar. 1 Acquired a franchise with a contract period of nine years for $585,360; the expiration date is March 1, 2027. Paid cash of $36,670 and borrowed the remainder from the bank. Sept. 1 Purchased a trademark for $79,420 cash. As the purchase was being finalized, spent $31,980 cash in legal fees to successfully defend the trademark in court. Prepare the entries to record the above transactions. (Credit account titles are automatically Indented when the amount is entered. Do not Indent manually. If no entry is requin amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record purchase of trademark) (To record costs incurred to defend trademark) SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the entries to record any amortization at December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry the amounts. Round answers to o decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Dec. 31 (To record amortization expense on copyrights) Dec. 31 (To record amortization expense on franchises)

Answer 1

Credit Date Jan 1 Account Title Copyrights Debit $112,260 Cash $112,260 Mar 1 $585,360 $36,670 $548,690 Sep 1 $79420 $79420 Sep 1 (To record purchase of copyrights) Franchises Cash Notes Payable (To record purchase of franchise) Trademark Cash (To record purchase of trademark) Trademark [Note (iii) Cash (To record cost incurred to defend trademark) Amortisation Expense [Note (i)] Accumulated Amortisation - Copyrights (To record amortisation expense on copyrights) Amortisation Expense [Note (ii)] Accumulated Amortisation - Franchises (To record amortisation expense on franchise) $31,980 $31,980 Dec 31 $18,710 $18,710 Dec 31 $54,200 $54,200 Note: (i) (ii) Cost of Copyrights $112,260 Useful Life (Years) Amortisation expense ($112,260 / 6] $18,710 Cost of Franchise $585,360 Useful Life (Years) Amortisation expense [($585,360 / 9) / 12 x 10] $54,200 (10 months - Mar 1 to Dec 31] The legal cost incurred to defend the trademark is considered to be the cost of trademark and is capitalised. (iii)