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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

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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

Question: Treasure Land Corporation incurred the following costs in 2017.

Cost of laboratory research aimed at the discovery of new knowledge

\(120,000

Cost of testing in search for product alternatives

100,000

Cost of engineering activity required to advance the design of a product to the manufacturing stage

210,000

Prototype testing subsequent to meeting economic viability

75,000

\)505,000

Prepare the necessary 2017 journal entry(ies) for Treasure Land.

What is meant by the term “underlying” as it relates to derivative financial instruments.

Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2015, the company expends \(325,000 on a research project, but by the end of 2015, it is impossible to determine whether any benefit will be derived from it.

  1. What account should be charged for the \)325,000, and how should it be shown in the financial statements?
  2. The project is completed in 2016, and a successful patent is obtained. The R&D costs to complete the project are \(130,000 (\)36,000 of these costs were incurred after achieving economic viability). The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2016 total \(24,000. The patent has an expected useful life of 5 years. Record these costs in the journal entry form. Also, record patent amortization (full year) in 2016.
  3. In 2017, the company successfully defends the patent in extended litigation at a cost of \)47,200, thereby extending the patent life to December 31, 2024. What is the proper way to account for this cost? Also, record patent amortization (full year) in 2017.
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