The intangible assets section of Glover Company at December 31, 2013, is presented below.
Patents ($61,400 cost less $6,140 amortization)
$55,260
Franchises ($36,200 cost less $14,480 amortization)
21,720
Total
$76,980
The patent was acquired in January 2013 and has a useful life of 10 years. The franchise was acquired in January 2010 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2014.
Jan. 2
Paid $40,860 legal costs to successfully defend the patent against infringement by another company.
Jan.–June
Developed a new product, incurring $137,570 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 $55,760 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 $135,000. The franchise has a useful life of 50 years.
