The following information concerns the intangible assets of Epstein Corporation:
ID: 2366608 • Letter: T
Question
The following information concerns the intangible assets of Epstein Corporation:
a. On June 30, 2013, Epstein completed the acquisition of the Johnstone Corporation for $2,120,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,800,000.
b. Included in the assets purchased from Johnstone was a patent that was valued at $72,800. The remaining legal life of the patent was 12 years, but Epstein believes that the patent will only be useful for another seven years
. c. Epstein acquired a franchise on October 1, 2013, by paying an initial franchise fee of $187,200. The contractual life of the franchise is 9 years.
1. Prepare year-end adjusting journal entries to recordamortizationexpense on the intangibles at December 31, 2013
2. Prepare the intangible asset section of the December 31, 2013, balance sheet
Explanation / Answer
Difference of the "2,120,000"- "1,800,000".. will be considered as good will.... if the company has proper reason for the life of the patent then .... $72800 will be divided by 7 and the value will be amortised yearly..... ENTRY... Amortization expense-patents (debit) .... Patents (credit)... Similarly the franchisee.... PLEASE RATE ME FIRST AND THEN I CAN HELP YOU FURTHER... RATE ONLY TO ONE PERSON.. THANKING YOU. LIFESAVER...:)
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