Homework SourseExercise 126 Sunland Company organized in 2016 has set up a
Exercise 12-6
Sunland Company, organized in 2016, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2017.
$369,600
360,000
444,000
132,000
237,000
$1,542,600
Prepare the necessary entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Make the entry as of December 31, 2017, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Reflect all balances accurately as of December 31, 2017.
| 1/2/17 | Purchased patent (7-year life) | $369,600 | ||
| 4/1/17 | Purchase goodwill (indefinite life) | 360,000 | ||
| 7/1/17 | Purchased franchise with 10-year life; expiration date 7/1/27 | 444,000 | ||
| 8/1/17 | Payment of copyright (5-year life) | 132,000 | ||
| 9/1/17 | Research and development costs | 237,000 | ||
| $1,542,600 |
Solution
Patents
369600
Goodwill
360000
Franchise
444000
Copyright
132000
Research and Development Expenses
237000
Intangible Assets
1542600
Amortization Expense
86000
Patents ($369600/7)
52800
Franchise($444000/10 x 6/12)
22200
Copyright ($132000/5 x 5/12)
11000
Balance of Intangible Assets as of December 31, 2017
Patents = $369600 - $52800 = $316800
Goodwill = $360000 (no amortization)
Franchise = $444000 - $22200 = $421800
Copyright = $132000 – 11000 = $121000
| Patents | 369600 | |
| Goodwill | 360000 | |
| Franchise | 444000 | |
| Copyright | 132000 | |
| Research and Development Expenses | 237000 | |
| Intangible Assets | 1542600 | |
| Amortization Expense | 86000 | |
| Patents ($369600/7) | 52800 | |
| Franchise($444000/10 x 6/12) | 22200 | |
| Copyright ($132000/5 x 5/12) | 11000 |
