Question

The intangible assets section of Sheffield Company at December 31,2022, is presented here. The patent was acquired in January 2022 and has a useful life of 10 years. The franchise was acquired in January 2019 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2023. Jan. 2 Paid $37,800 legal costs to successfully defend the patent against infringement by another company. Sept. Paid $46,000 to an extremely large defensive lineman to appear in commercials advertising the company's products. The 1 commercials aired in September and October. Oct. 1 Acquired a franchise for $147,400. The franchise has a useful life of 50 years. Nov.- Developed a new product, incurring $147,000 in research and development costs during December. A patent was Dec. granted for the product on January 1, 2024. Prepare journal entries to record the transactions above. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Prepare journal entries to record the 2023 amortization expense for intangible assets. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

Answer 1

The journal entries vary based on the type of intangible assets in question, the transaction type, and whether costs can be capitalized. The 2023 amortization expenses for both the patent and the franchise are also shared, calculated based on their respective useful lives.

The subject of this question falls under Business, specifically within accounting and the management of intangible assets. Given the transactions described, the entries would look like this:

For the 2023 amortization expense of intangible assets:

• Patent: Debit Amortization Expense $12,600 (Patent cost divided by 10 years of useful life); Credit Accumulated Amortization - Patent $12,600.

Franchise (from 2019): Debit Amortization Expense $14,740 (Franchise cost divided by 10 years of useful life); Credit Accumulated Amortization - Franchise $14,740.