Reference no: EM133102148

Question - The intangible assets section of Nero Berhad at 31 December 2020 is as follows:

Intangible Assets

1) Patents (RM60,000 cost less RM6,000 amortization) = 54,000

2) Franchises (RM48,000 cost less RM19,200 amortization) = 28,800

3) Trademarks (RM50,000 cost less RM10,000 amortization) = 40,000

The patent was acquired in January 2020, while the franchise and the trademark were acquired in January 2017. There are no additional costs incurred after the date of acquisition and the company uses straight-line method to amortize intangible assets. The following information is given at 1 January 2021.

The trademark, which was acquired in January 2017, is now determined to have a remaining useful life of only 8 years.

The franchise remaining useful life is 10 years.

The following cash transactions may have affected the intangible assets in 2021:

1) 2 January Paid RM3,600 legal fees to successfully defend the patent, that was acquired in January 2020, against infringement by another company.

2) 30 June Because of the changes in the company's core business, the franchise that was acquired in January 2017 was sold to a competitor for RM35,000

3) 1 August Made an expenditure of RM30,000 to acquire a patent on an established product. The patent has a remaining legal life of 10 years, but the company expects to produce and sell the product for only 6 more years.

Required - Prepare journal entries to record the transactions, including the amortization expenses on 31 December 2021 (if applicable).