The intangible assets section of Redeker Company at December 31, 2008, is presented

below. 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
2008 and has a useful life of 10 years.The franchise was acquired in January 2005 and
also has a useful life of 10 years.The following cash transactions may have affected
intangible assets during 2009. 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. Instructions (a) Prepare
journal entries to record the transactions above. (b) Prepare journal entries to record the
2009 amortization expense. (c) Prepare the intangible assets section of the balance sheet
at December 31, 2009.

(a) Jan. 2 Patents...........................................................................  45,000

Cash.....................................................................
 45,000

Jan.– Research and Development

June   Expense...................................................................... 140,000
Cash.....................................................................
140,000

Sept. 1 Advertising Expense.....................................................  50,000

Cash.....................................................................
 50,000

Oct. 1 Franchise....................................................................... 100,000

Cash.....................................................................
100,000

(b) Dec. 31 Amortization Expense—Patents................................. 12,000

Patents.................................................................
12,000
  [($70,000 X 1/10) + ($45,000 X 1/9)]

31 Amortization Expense—Franchise.............................   5,300

 Franchise.............................................................
  5,300
  [($48,000 X 1/10) +
  ($100,000 X 1/50 X 3/12)]

(c) Intangible Assets

Patents ($115,000 cost – $19,000 amortization) (1)........................................... $ 
96,000
Franchise ($148,000 cost – $24,500 amortization) (2).......................................
123,500
Total intangible assets................................................................................
$219,500

(1) Cost ($70,000 + $45,000); amortization ($7,000 + $12,000).

(2) Cost ($48,000 + $100,000); amortization ($19,200 + $5,300).