Question

Prepare entries to ru n related to acquisition and amortization of intangibles, prepare the intangible assets section and note 1.SA (LO 4,5), AP The intangible assets section of mato Corporation's balance sheet at December 31 2022, is presented here. Patents (560,000 cost less $6,000 amortization) $54,000 10,800 Copyrights ($36,000 cost less $25,200 amortization) Total $64.800 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 $46,800 legal costs to successfully defend the patent against infringement by another company. Jan-June Developed a new product, incurring $230,000 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 $20,000. Sept. 1 Paid $40,000 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 $200,000. The copyright has a useful life and legal life of 50 years. Instructions a. Prepare journal entries to record the transactions. b. Prepare journal entries to record the 2023 amortization expense for intangible assets. c. Prepare the intangible assets section of the balance sheet at December 31, 2023. d. Prepare the note to the financial statements on Amato Corporation's intangible assets as of Decem- ber 31, 2023. C. Tot. intangibles $315,300 mont the folloinntrans Premine ennes marrier

Answer 1

Credit ($) Journal No. Date Account Titles and Explanation 2-Jan Patents Cash (To record the legal cost paid to defend the patent) Debit ($) 46,800 46,800 230,000 Jan-June | Research and Developement Expenditure Cash (To record the Research and Developement Expenditure) 230,000 20,000 1-Jul Patents Cash (To record the value of the patent on new product developement) 20,000 40,000 40,000 1-Sep Prepaid advertisement Cash (To record the advance payment of advertisement) 200,000 1-Oct Copyrights Cash (To record the acquirement of copyright) 200,000 58,800 Amortization expense Accumulated amortization - patents (6000+5200) Accumulated amortization - copyrights (3600+4000) Accumulated amortization - advertisement (To record the annual amortization) 11,200 7,600 40,000

Amount Amortization schedule: Asset Patent Copyrights Patent (defend cost) Advertisement Copyrights Annual amortization Calculation 60000/10 36000/10 46800/9 6,000 3,600 5,200 40,000 4,000 58,800 9 years from Jan 2023 to Dec 2031. Fully amortized as benefit consumed within 2023. 200000/50

Amato Corporation's Balance Sheet (Partial) For the Year Ended December 31, 2023 Assets Intangible assets: Patents (60000+46800+20000) 126,800 Less: Accumulated amortization (6000+11200) 17,200 Copyrights (36000+200000) 236,000 Less: Accumulated amortization (25200+7600), 32,800 109,600 203,200 312,800 Total intangible assets Total assets Note to the finacial stattement: d $ 230,0000 is incurred in the research and developement of a new product.