Assignment: Redeker Company
The intangible assets section of Redeker Company at December 31, 2011, is presented below.
Problems: Set A 435
(b) Depreciation Expense-building $570,000; equipment $4,772,000
(c) Total plant assets $61,270,000
Patent ($70,000 cost less $7,000 amortization) $63,000
Franchise ($48,000 cost less $19,200 amortization) 28,800
Total $91,800
The patent was acquired in January 2011 and has a useful life of 10 years.The franchise was acquired in January 2008 and also has a useful life of 10 years.The following cash transactions may have affected intangible assets during 2012.
Jan. 2 Paid $45,000 legal costs to successfully defend the patent against infringement by another company.
Jan.-June Developed a new product, incurring $140,000 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 $50,000 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 $100,000.The franchise has a useful life of 50 years.
b) Prepare journal entries to record the 2012 amortization expense.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.