Question

Required information Problem 7-6B Record amortization and prepare the intangible assets section (L07-5) (The following information applies to the questions displayed below.) The following information relates to the intangible assets of Lettuce Express a. On January 1, 2021, Lettuce Express completed the purchase of Farmers Produce, Inc., for $1,470,000 in cash. The fair value of the identifiable net assets of Farmers Produce was $1,323,000. b. Included in the assets purchased from Farmers Produce was a patent for a method of processing lettuce valued at $37,800. The original legal life of the patent was 20 years. There are still 17 years left on the patent, but Lettuce Express estimates the patent will be useful for only 9 more years, c. Lettuce Express acquired a franchise on July 1, 2021, by paying an initial franchise fee of $195,200. The contractual life of the franchise is eight years.

Answer 1

Answer Journal Entry Debit Transaction General Journal Credit -- No Entry - a Goodwill is not amortized Amortization Expense ($37,800/9 years) $4,200 $4,200 Patent (To record the Amortization Expense) Amortization Expense [($195,200/8 years) x 6/12] $12,200 $12,200 Franchise (To record the Amortization Expense)