Question

Exercise 12-6 Pharoah Company, organized in 2016, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2017. 1/2/17 4/1/17 7/1/17 8/1/17 9/1/17 Purchased patent (9-year life) Purchase goodwill (indefinite life) Purchased franchise with 10-year life; expiration date 7/1/27 Payment of copyright (5-year life) Research and development costs $475,200 365,600 456,000 120,000 241,000 $1,657,800 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 amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit

This question has three parts. thank you.

Answer 1

1
	Debit	Credit
Patents	475200
Goodwill	365600
Franchise	456000
Copyright	120000
Research and Development Expenses	241000
Intangible Assets		1657800
2
	Debit	Credit
Amortization Expense	85600
Patents		52800	=475200/9
Franchise		22800	=456000/10*6/12
Copyright		10000	=120000/5*5/12
3
Use straight-line amortization:
Patents	422400		=475200-52800
Goodwill	365600
Franchise	433200		=456000-22800
Copyright	110000		=120000-10000