Problem - Ceda Co. has equipment that cost $79,870 and that has been depreciated $49, 830. record the disposal under the following assumptions.
(a) It was scrapped as having no value.
(b) It was sold for $ 23,860.
(c) It was sold for $33,820.
The intangible assets section of Sappelt Company at December 31, 2014, is presented below.
Patents ($65,100 cost less $6,510 amortization) $58,590
Franchises ($35,500 cost less $14,200 amortization) 21,300
Total $79,890
The patent was acquired in January 2014 and has a useful life of 10 years. The franchise was acquired in January 2011 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2015.
Jan 2 paid $34,920 legal costs to successful defend the patent against infringement by another company
Jan-June Developed a new product, incurring $140,620 in research and development costs. A patent was granted for the product on July 1. It is useful life is equal to its legal life.
Sept 1 Paid $50,240 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 $150,000. The franchise has a useful life of 50 years.
Prepare Journal entries to record the transactions above.
Prepare Journal entries to record the 2015 amortization expense.