12) Formula Results signed a 10-year lease for a store in the best mall in the area. At the beginning of the seventh year of the lease, the company decided to refurbish the store. The following expenditures were made:
Item Cost Useful Life
Carpeting $ 6,000 3 years
Lighting Fixtures $ 4,500 6 years
Wall Construction $10,000 8 years
All items were paid in cash. There is no residual value for any of the items noted above.
a. Prepare the journal entry to record the expenditures of the above items.
b. Prepare the year-end adjustment to record the expense associated with the above items.
13) Consider each event concerning intangible assets independently:
a. Moonlit Corporation purchased a patent for $476,000 on January 1, 20X3. The company paid cash. The patent has a remaining legal life of 14 years. Due to anticipated technological change, it is expected that the patent will be useless in 5 years.
b. In 20X3, Beaumont Company spent $3,500,000 cash in research and development costs. However, the research did not result in a patent. Beaumont Company acquired a patent from another company for $1,000,000 on January 1, 20X3. The company paid cash. The acquired patent is expected to last 8 years.
Prepare all journal entries necessitated by events in a. and b. above during the year 20X3.