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Chapter 12: 12-11Q (page 637)

Explain the difference between artistic-related intangible assets and contract-related intangible assets.

Short Answer

Expert verified

The distinction between artistic-related intangible assets and contract-related intangible assets is that copyrights protect artistic-related assets, but contract-related assets represent the value of rights arising from contractual agreements.

Step by step solution

01

Artistic-related intangible assets

Ownership rights to plays, photos, photographs, and video and audiovisual content are examples of artistic intangible assets. Copyrights safeguard these ownership rights.

02

Contract-related intangible assets

These are the worth of rights arising from contractual agreements. Examples are franchise and license agreements, building permissions, broadcast rights, and service or supply contracts.

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Most popular questions from this chapter

What is the purpose of a fair value hedge?

Taylor Swift Corporation purchases a patent from Salmon Company on January 1, 2017, for $54,000. The patent has a remaining legal life of 16 years. Taylor Swift feels the patent will be useful for 10 years. Prepare Taylor Swift’s journal entries to record the purchase of the patent and 2017 amortization.

Question: Briefly discuss the convergence efforts that are underway in the area of intangible assets.

Question: (Recording and Amortization of Intangibles) Marshall Company, organized in 2016, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2017.

1/2/17

Purchased patent (8-year life)

\( 350,000

4/1/17

Purchase goodwill (indefinite life)

360,000

7/1/17

Purchased franchise with 10-year life; expiration date 7/1/27

450,000

8/1/17

Payment of copyright (5-year life)

156,000

9/1/17

Research and development costs

215,000

\)1,531,000

Instructions

Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2017, recording any necessary amortization and reflecting all balances accurately as of that date. (Use straight-line amortization.)

On January 1, 2017, Hi and Lois Company purchased 12% bonds having a maturity value of \(300,000 for \)322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Hi and Lois Company uses the effective interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

Instructions

(a) Prepare the journal entry at the date of the bond purchase.

(b) Prepare a bond amortization schedule.

(c) Prepare the journal entry to record the interest revenue and the amortization at December 31, 2017.

(d) Prepare the journal entry to record the interestand the amortization at December 31, 2018.
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