Problem - The intangible assets section of Glover Company at December 31, 2013, is presented below.
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Patents ($77,200 cost less $7,720 amortization)
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$69,480
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Franchises ($39,900 cost less $15,960 amortization)
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23,940
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Total
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$93,420
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The patent was acquired in January 2013 and has a useful life of 10 years. The franchise was acquired in January 2010 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2014.
Jan. 2 Paid $53,100 legal costs to successfully defend the patent against infringement by another company.
Jan.-June Developed a new product, incurring $138,260 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 $59,240 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 $126,000. The franchise has a useful life of 50 years.
Required -
Prepare journal entries to record the transactions above.
Prepare journal entries to record the 2014 amortization expense.