Problem #3: Recording Intangibles George’s Software Co. acquired Juanita’s Quick

Question

Problem #3: Recording Intangibles
George’s Software Co. acquired Juanita’s Quick Stop Computer Shop late in 2016. There was goodwill of $235,400 (indefinite life) associated with the acquisition. George’s Software Co. paid cash of $301,200 for a patent (5 year life) on January 1, 2017. It also had research and development costs of $134,600 related to an ongoing project. They paid the R&D in cash. Record the necessary JEs for 2017 (no JE for the goodwill). Also, record the amortization expense associated with the patent.  

Recording Intangibles

JE

Account

Debit

Credit

A. Patent

B. R&D

C. Amor.

What is the Patent balance and Goodwill balance as of 12/31/17?
Patent_________________                                                                                       Goodwill___________________

JE

Account

Debit

Credit

A. Patent

B. R&D

C. Amor.

Explanation / Answer

JE Accounts Dr CR A.Patent Patents rights Dr. 301,200 Cash account Cr. 301,200 B. R&D Patents rights Dr. 134,600 Cash account Cr. 134,600 (Being R&D expenditures capitalised in Patents account only) C. Amort Amortization expense Dr. 87,160 Accumulated Amortization- Patents Cr. 87,160 (Being total cost of $ 435,800 of Patents amortized in 5 years life) Balances as on Dec31 2017 Goodwill 235,400 Patents rights 435,800 Less: Accumulated Amortization 87160 348,640

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.