Question

mpuieu n 5 years. Brush hopes that the ferry will com Tomtu are expected to be only 20% of those earned before the bridge is opened. Paid $28,000 of legal costs to successfully defend the patent acquired in Transaction a. d Paid a racc car driver $50,000 to have the Brush Company name prominently displaycd on the race car Required: Prepare the journal entries to record the preceding transactions. 2 Prepare the journal entries to record the amortization of intangible assets for 2019, if appropriate over the legal life unless a better alternative is indicated. E12-13 Cost of Patents Davis Rescarch Company engaged in the following 5 transactions during 2019: LO 12.1 LO 12.2 2. Costs paid to improve patent: 1. Purchased a patent for $35,000. Legal costs of $5,000 were also incurred. LO 12.4 Engineering costs Assembling and testing prototypes Other R&D costs $20,000 10,000 25,000 SHOW ME HOW 3. Licensed a manufacturing process to another company and received $80,000 as an advance payr 4. Successfully defended a patent infringement suit at a cost of $12,000. 5. Earned $5,000 of the advance payment on the licensed manufacturing process in Item 4. Required: Prepare journal entries to record the preceding transactions. E12-14 Intangibles: Balance Sheet Presentation and Income Statement Effects Barb Company has L0 12.1 mation on intangible assets as follows: 10 12.2 1. A patent was purchased from Lou Company for $1,500,000 on January 1, 2018. Barb estima 10 12.3 ing useful life of the patent to be 10 years. The patent was carried in Lou's accounting recon Rink Company for $500,000. In addition, 5% 10 12.4 000 when Lou sold it to Barb.

problem 12-13

Answer 1

Solution

Davis Research Company

Journal Entries

Date/Transaction	Account Titles	Debit	Credit
1	Patent	$40,000
	Cash		$40,000
	(To record purchase cost of patent (35,000 + 5,000))
2	Research and Development Expense	$55,000
	Cash		$55,000
	(To record R&D costs including engineering costs, assembling and testing prototypes and other patent related R&D costs)
3	Cash	$80,000
	Unearned Sales Revenue		$80,000
	(Advance cash received on the licence manufacturing process)
4	Patent	$12,000
	Cash		$12,000
	(To record patent legal cost incurred to defend patent infringement)
5	Unearned Sales Revenue	$5,000
	Sales Revenue		$5,000
	(To record earned portion of unearned revenue)