Question

Ivanhoe Company, organized in 2019, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2020. 1/2/20 Purchased patent (7-year life) $310,800 4/1/20 Purchase goodwill (indefinite life) 354,000 434,000 7/1/20 Purchased franchise with 10-year life; expiration date 7/1/30 160,800 8/1/20 Payment of copyright (5-year life) Research and development costs 9/1/20 224,000 $1,483,600 Prepare the necessary entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. (Credit account titles are automatically indented when entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts.) amount Account Titles and Explanation Debit Credit

Answer 1

Debit Account Titles and Explanation Credit Patents Godwill Franchise Copyright Research and development expense Intangible assets (To clear the intangible assets account) $310,800 $ 354,000 $ 434,000 $160,800 $ 224,000 $1,483,600 Account Titles and Explanation Debit Credit Amortization expense Patents ($310,800/7) Franchise ($434,000/10*6/12) Copyright ($160,800/5*5/12) (To record the amortization expense) $ 79,500 $ 44,400 21,700 13,400 Use straight-line amortization: Patents ($310,800-$44,400) Godwill Franchise ($434,000-$21,700) Copyright ($160,800-$13,400) $266,400 $ 354,000 $ 412,300 $147,400