Cost of Intangibles
Response to the following problem:
The Byrd Corporation engaged in the following transactions at the beginning of 2010:
1. Purchased a Hogburger franchise for a five-year, $60,000, 10%-interest-bearing note. The franchise has an indefinite life providing the terms of the franchise are not violated.
2. Sold a tradename for $50,000. The tradename had a carrying value of $5,000.
3. Paid an advertising agency $60,000 to develop a two-year advertising campaign to promote a new tradename.
4. Incurred legal fees of $5,000 to register a new tradename.
5. Purchased the copyright to a new movie for $500,000. The movie is made during 2010 at a cost of $15 million. It will begin showing in 2011 and is expected to gross $10 million during 2011, $20 million during 2012, and $10 million during 2013.
Required
Prepare journal entries to record the preceding transactions, including any appropriate adjusting entries for 2010.