The Brush Company engaged in the following transactions at the beginning of 2007:
1. Purchased a patent for $70,000 that had originally been filed in January 2001. The purchase was made to protect another patent that the company had filed for in January 2003 and subsequently received.
2. Purchased the rights to a novel by a best-selling novelist in exchange for 10,000 shares of $10 par value common stock selling for $60 per share. The book sells one million copies in 2007 and is expected to sell a total of 500,000 copies in future years.
3. Purchased the franchise to operate a ferry service from the state government for $10,000. A bridge has been planned to replace the ferry, and it is expected that it will be completed in five years. Brush hopes that the ferry will continue as a tourist attraction, but profits are expected to be only 20% of those earned before the bridge is opened.
4. Paid $28,000 of legal costs to successfully defend the patent acquired in transaction 1.
5. Paid a race car driver $50,000 to have the Brush Company name prominently displayed on his car for two years.
Prepare journal entries to record the preceding transactions, including the first year’s amortization of intangible assets where appropriate. Amortize over the legal life unless a better alternative is indicated.