Provide the following journal entries at December 31, 2015 (year-end): a) Morgan

Question

Provide the following journal entries at December 31, 2015 (year-end):

a) Morgan Company paid accumulated costs for a trademark on March 10, 2014 on the books recorded as an intangible asset of $180,000. At December 31, 2014, the company assessed the value of this asset and continued to carry it as $180,000. At December 31, 2015, the company hired a firm that determined the value of this intangible asset has decreased $20,000.

b) Anna Corporation has purchased a company on December 1, 2015, as well as its list of customers valued at $300,000. Anna has exclusive rights to market to these customers for a period of six months. Anna determines that this list should be amortized straight-line over six months.

Explanation / Answer

a) In the books of Morgan Co.:

10th March 2014 Intangible Assets a/c Debit $180,000 Cash a/c credit $180,000.

(Being the cost of patents acquired for cash)

31st December 2014 No entry

December 31, 2015 Amortization of intangible assets a/c Debit $ 20,000 Intangible asset a/c Credit $ 20,000

Retained Earnings a/c Debi t$20,000 Amortization of Intangible assets a/c Credit $20,000

(Being amortization of trademarks recognized)

b) In the books of Anna Corporation

December 1, 2015 Exclusive Marketing Rights a/c Debit $ 300,000 Cash a/c Credit $ 300,000

At the end of every month following, the following entry to be passed for 6 months:

Amortization of exclusive marketing Rights a/ c Debit $ 50,000, Exclusive marketing rights a/c $ 50,000

December 31, 2015

Retained Earnings a/c Debit $ 300,000, Amortization of exclusive marketing rights a/c Credit $ 300,000

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