Question

The intangible assets section of Blue Corporation’s balance sheet at December 31, 2022, is presented here. Patents ($73,200 cost less $7,400 amortization) $65,800 Copyrights ($37,000 cost less $24,500 amortization) 12,500 Total $78,300 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 $36,000 legal costs to successfully defend the patent against infringement by another company. Jan.– June Developed a new product, incurring $233,500 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 $30,000. Sept. 1 Paid $61,500 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 $301,000. The copyright has a useful life and legal life of 50 years.

Prepare journal entries to record the transactions. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Prepare journal entries to record the 2023 amortization expense for intangible assets. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Prepare the intangible assets section of the balance sheet at December 31, 2023.

Answer 1

Part A

Date	Account titles and explanation	Debit	Credit
Jan. 2	Patents	36000
	Cash		36000
Jan.– June	Research and Development Expense	233500
	Cash		233500
July	Patents	30000
	Cash		30000
Sept. 1	Advertising expense	61500
	Cash		61500
Oct. 1	Copyright	301000
	Cash		301000

Part B

Date	Account titles and explanation	Debit	Credit
Dec. 31	Amortization expense - Patents	29320
	Patents (73200*1/10)+(36000*1/9)+(30000*1/20*/12)		29320
Dec. 31	Amortization expense - copyrights	6130
	Copyrights ( 37000*1/8)+(301000*1/50*3/12)		6130

Part C

Intangible Assets
Patents	102480
Copyrights	307370
Total intangible assets	$409850

(73200+36000+30000)-(7400+29320) = 102480

(37000+301000)-(24500+6130) = 307370