Question

P9-7A. The intangible assets section of SappeltCompany at December 31, 2015, is presented below.+

Patents ($70,000 cost less $7,000 amortization $63,000

Franchises ($48,000 cost less $19,200 amortization $28,800

                                                                               Total                     $91,800

The patent was acquired inJanuary 2015 and has a useful life of 10 years. The franchise wasacquired in January 2012 and also has a useful life of 10 years.The following cash transactions may have affected intangible assetsduring 2016.

Jan. 2            Paid $27,000 legal costs to successfully defend the patent againstinfringement by another company.

Jan.–June       Developed a new product,incurring $140,000 in research and development costs. A patent wasgranted for the product on July 1. Its useful life is equal to itslegal life.

Sept. 1           Paid$50,000 to an extremely large defensive lineman to appear incommercials advertising the company’s products. The commercialswill air in September and October.

Oct. 1            Acquired a franchise for $140,000. The franchise has a useful lifeof 50 years.

Instructions

Prepare journal entries to record the transactions above.

Prepare journal entries to record the 2016 amortizationexpense.

Prepare the intangible assets section of the balance sheet atDecember 31, 2016.