Question

The intangible assets section of Ayayai Corporation’s balance sheet at December 31, 2022, is presented here....

The intangible assets section of Ayayai Corporation’s balance sheet at December 31, 2022, is presented here.
Patents ($70,000 cost less $6,000 amortization)

$64,000

Copyrights ($36,000 cost less $26,000 amortization)

10,000

Total

$74,000


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 $27,000 legal costs to successfully defend the patent against infringement by another company.
Jan.– June Developed a new product, incurring $231,000 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 $10,000.
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 $201,000. 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.)

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Answer #1
Date General Journal Debit Credit
Jan 2 Patents               27,000
Cash            27,000
(to record cash paid for legal cost to successfully defend the patent against infringement by another company)
Jan - June Research and development expense             241,000
Cash          241,000
(to record the research and development cost)
Sept. 1 Advertising expense               40,000
Cash            40,000
(to record advertising expense paid)
Oct.1 Copyright             201,000
Cash          201,000
(to record acquisition of copyright)
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