The following information concerns the intangible assets of Epstein Corporation:
ID: 2459333 • Letter: T
Question
The following information concerns the intangible assets of Epstein Corporation:
On June 30, 2016, Epstein completed the acquisition of the Johnstone Corporation for $2,420,000 in cash. The fair value of the net identifiable assets of Johnstone was $2,050,000.
Included in the assets purchased from Johnstone was a patent that was valued at $91,200. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years.
Epstein acquired a franchise on October 1, 2016, by paying an initial franchise fee of $250,800. The contractual life of the franchise is 11 years.
Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2016.
2. Prepare the intangible asset section of the December 31, 2016, balance sheet.
a.On June 30, 2016, Epstein completed the acquisition of the Johnstone Corporation for $2,420,000 in cash. The fair value of the net identifiable assets of Johnstone was $2,050,000.
b.Included in the assets purchased from Johnstone was a patent that was valued at $91,200. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years.
c.Epstein acquired a franchise on October 1, 2016, by paying an initial franchise fee of $250,800. The contractual life of the franchise is 11 years.
Explanation / Answer
1 Amortization Exp. A/c dr. 11400* To Accumulated amortization A/C 11400* Calculation* 91200/8*0.5 = 5700 250800/11 for full year = 22800 for 3 month (22800/12*3) = 5700 Total 11400 2 Assest Intangible Assets Patent 91200 less : Amortization 5700 85500 Franchies Fees 250,800 less : Amortization 5700 245,100
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.