Intangible assets
The following transaction involving intangible assets of Penner Corporation occurred on or near December 31, 2004. Complete the chart below by writing the journal entry (ies) needed at that date to record the transaction and at December 31, 2005 to record any resultant amortization. If no entry is required at a particular date, “write none needed”.
1. Penner paid Grand Company $200,000 for the On date of Transaction On Dec 31, 2005
exclusive right to market a particular product,
using the Grand name and logo in promotional
Material. The franchise runs for as long as Penner
is in business.
2 Penner spent $300,000 developing a new manu-
facturing process. It has applied for a patent, and it
believes that its application will be successful.
3. In January, 2005 Penner’s application for a patent
(#2 above) was granted. Legal and registration cost
incurred were $50,000. The patent runs for 20 years
The patent runs for 20 years. The manufacturing
Process will be useful to Penner for 10 years.
4. Penner incurred $80,000 in successfully defending
one of its patents in an infringement suit. The patent
expires during December, 2008.
5. Penner incurred $200,000 in an unsuccessful patent
defense. As a result of the adverse verdict, the patent,
with remaining unamortized cost of $105,000, is deemed
worthless.
6. Penner paid Sneed Laboratories $52,000 for research and
development work performed by Sneed under contract for
Penner. The benefits are expected to last 6 years.
Non-Interest Bearing Note
On January 1, 2009, Ellen Green Company made the following acquisition:
Purchased land having a fair market value of $200,000 by issuing a 5-year, non interest bearing note in the face amount of $275,000. the company normally pays 11% for funds in borrows from it bank.
Prepare the journal entry to record the purchase the land and the issuance of the note
Prepare the journal entry to record the interest expense for 2009.
