A Company Purchased a Patent on January 1 2017 for $2500000

Essay

A company purchased a patent on January 1 2017 for $2500000. The patent's legal life is 20 years but the company estimates that the patent's useful life will only be 5 years from the date of acquisition. On June 30 2017 the company paid legal costs of $135000 in successfully defending the patent in an infringement suit. Prepare the journal entry to amortize the patent at year end on December 31 2017.
(b) Trent Company purchased a franchise from Tastee Food Company for $400000 on January 1 2017. The franchise is for an indefinite time period and gives Trent Company the exclusive rights to sell Tastee Wings in a particular territory. Prepare the journal entry to record the acquisition of the franchise and any necessary adjusting entry at year end on December 31 2017.
(c) Kline Company incurred research and development costs of $500000 in 2017 in developing a new product. Prepare the necessary journal entries during 2017 to record these events and any adjustments at year end on December 31 2017.