The intangible assets section of Centaur Company at December 31, 2012, is presented below.
| Patents ($84,400 cost less $8,440 amortization) |
|
$75,960 |
| Franchises ($44,500 cost less $17,800 amortization) |
|
26,700 |
| Total |
|
$102,660 |
The patent was acquired in January 2012 and has a useful life of 10 years. The franchise was acquired in January 2009 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2013.
| Jan. 2 |
|
Paid $49,680 legal costs to successfully defend the patent against infringement by another company. |
| Jan.-June |
|
Developed a new product, incurring $140,170 in research and development costs. A patent was granted for the product on July 1. Its useful life is equal to its legal life. |
| Sept. 1 |
|
Paid $51,990 to an extremely large defensive lineman to appear in commercials advertising the company's products. The commercials will air in September and October. |
| Oct. 1 |
|
Acquired a franchise for $192,000. The franchise has a useful life of 50 years.
|
(a) Prepare journal entries to record the transactions above.
(b) Prepare journal entries to record the 2013 amortization expense