Question

Accounting for Plant and Intangible Assets Selected transactions of Continental Publishers, Inc., for 2016 are given below: Jan. 2 Paid $100,000 to purchase copyrights to a series of romantic novels. The copyrights expire in 40 years, although sales of the novels are expected to stop after 10 years. Mar. Discovered a satellite dish antenna has been destroyed by lightning. The loss is covered by insurance and a claim is filed today. The antenna cost $9,380 when installed on July 1, 2015, and was being depreciated over 12 years with a $900 salvage value. Straight-line depreciation was last recorded on December 31, 2015. Continental expects to receive an insurance settlement of $8,300. April Paid $130,000 to remodel space to create an employee exercise area on the lower level in a leased building. The building's remaining useful life is 40 years; the lease on the building expires in 12 years. July 1 Paid $280,000 to acquire a patent on a new publishing process. The patent has a remaining legal life of 15 years. Continental estimates the new process will be utilized for 6 years before it becomes obsolete. 1 1 Nov. 1 Paid $65,000 to obtain a four-year franchise to sell a new series of computerized do-it-yourself manuals. Required a. Prepare journal entries to record these transactions. b. Prepare the December 31 journal entries to record depreciation and amortization expense for assets acquired during the year. Continental uses straight line depreciation and amortization. Round all answers to the nearest dollar. Transactions Depreciation & Amortization General Journal Description Date Debit Credit Jan. 2. To record purchase of copyrights. Mar. 1 To record depreciation on satellite dish antenna.

Answer 1

a) Journal Entries
Date	General Journal	Debit	Credit
Jan. 2	Copy Rights	$100,000
	Cash		$100,000
	(To record the purchase of copy rights)
Mar. 1	Depreciation Expense ($9,380-$900/12 * 2/12)	$118
	Accumulated Depreciation		$118
	(To record the depreciation on satellite for two months)
Mar. 1	Accumulated Depreciation [($9,380 - $900/12 years * 6/12) + $118]	$471
	Loss due to damage ($9,380 - $353 - $118)	$8,909
	Satellite Dish Antena		$9,380
	(To record the satellite distroyed by fire)
Apr. 1	Lease Buildings	$130,000
	Cash		$130,000
	(To record the additions to the lease building)
Jul. 1	Patents	$280,000
	Cash		$280,000
	(To record the purchase of patents)
Nov. 1	Franchise	$65,000
	Cash		$65,000
	(To record the purchase of franchise)
b) Journal Entries
Date	General Journal	Debit	Credit
Dec. 31	Amortization Expense - Copy Rights ($100,000/10 years)	$10,000
	Accumulated Amortization - Copy Rights		$10,000
	(To record the amortization on the copy rights)
Dec. 31	Depreciation Expense - Buildings ($130,000/12 years*9/12)	$8,125
	Accumulated Depreciation - Buildings		$8,125
	(To record the depreciation on the buildings)
Dec. 31	Amortization Expense - Patents ($280,000/6*6/12)	$23,333
	Accumulated Amortization - Patents		$23,333
	(To record the amortization on the patents)
Dec. 31	Amortization Expense - Franchise ($65,000/4 years * 2/12)	$2,708
	Accumulated Amortization - Franchise		$2,708
	(To record the amortization on the franchise)