journal entries
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions
Section: Chapter Questions
Problem 38P
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Question
The following transactions involving intangible assets of Blossom Corporation occurred on or near December 31, 2020.
| 1. | Minton paid Grand Company $360,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Blossom is in business. | ||
| 2. | Blossom spent $540,000 developing a new manufacturing process. It has applied for a patent, and it believes that its application will be successful. | ||
| 3. | In January, 2021, Blossom's application for a patent (#2 above) was granted. Legal and registration costs incurred were $189,000. The patent runs for 20 years. The manufacturing process will be useful to Minton for 10 years. | ||
| 4. | Blossom incurred $144,000 in successfully defending one of its patents in an infringement suit. The patent expires during December, 2024. | ||
| 5. | Blossom incurred $432,000 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a remaining unamortized cost of $226,800, is deemed worthless. | ||
| 6. |
Blossom paid Sneed Laboratories $93,600 for research and development work performed by Sneed under contract for Blossom. The benefits are expected to last six years.
|
1). Prepare journal entries for on the date of transaction.
2). Prepare
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