Question

Problem 9-7B (Part Level Submission) The intangible assets section of Cullumber Company at December 31, 2016, is presented below. Patents (£78,300 cost less £7,830 amortization) Copyrights (£42,700 cost less £17,080 amortization) Total £70,470 25,620 £96,090 The patent was acquired in January 1, 2016 and has a useful life of 10 years. The copyright was acquired in January 1, 2013 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2017. Jan. 2 Paid £39,870 legal costs to successfully defend the patent against infringement by another company. Jan. - June Developed a new product, incurring £119,170 in research costs and £114,600 in development costs prior to technological feasibility. A patent was granted for the product on July 1. Its useful life is equal to its legal life. Sept. 1 Paid £159,100 to an X-Games star to appear in commercials advertising the company's products. The commercials will air in September and October. Oct. 1 Acquired a copyright for £153,000. The copyright has a useful life of 40 years.

Question: Prepare journal entries to record the 2017 amortization expense for intangible assets.

Answer 1

Patents:
Book value as on Dec 31,2016	$70,470
Add:Legal Fees	$39,870
Book value as on Jan 1,2017	$1,10,340
Remaining usefu life	9 Years
Amortization expenses($110,340/9)	$12,260
Copyrights:
Book value as on Dec 31,2016	$25,620
Add:Acquired Copyrights	$1,53,000
Book value as on Jan 1,2017	$1,78,620
Amortization expenses on old Franchise	$17,080
Amortization expenses on new Franchise($153,000/40)	$3,825
Total amortization expenses for 2017	$20,905
Date	Account and explanation	Debit	Credit
2017
Dec-31	Amortization expenses-Patents	$12,260
	Accumulated Amortization-Patents		$12,260
Dec-31	Amortization expenses-Franchise	$20,905
	Accumulated Amortization-Franchise		$20,905