Question

The following information concerns the intangible assets of Epstein Corporation: a. On June 30, 2021, Epstein completed the acquisition of the Johnstone Corporation for $2,120,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,800,000. b. Included in the assets purchased from Johnstone was a patent that was valued at $72,800. The remaining legal life of the patent was 12 years, but Epstein believes that the patent will only be useful for another seven years. c. Epstein acquired a franchise on October 1, 2021, by paying an initial franchise fee of $187,200. The contractual life of the franchise is 9 years. Required: 1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2021. 2. Prepare the intangible asset section of the December 31, 2021, balance sheet. Complete this question by entering your answers in the tabs below. Required Required Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2021. (Do not round intermediate calculations.). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show less View transaction list Journal entry worksheet < 1 2 3 Record the goodwill amortization. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal Required 1 Required 2 >

Answer 1

Answer Journal Entry | Nos. | Debit Credit General Journal No journal entry required $5,200 Amortization Expense [($72,800 / 7 yrs) 6/12] Patent (To record amortization of patent) $5,200 $5,200 Amortization Expense [($187,200 / 9 yrs) x 3/12] Franchise (To record amortization of franchise) $5,200 Partial Balance Sheet December, 31 2021 Intangible Assets: Goodwill ($2,120,000 - $1,800,000) Patent ($72,800 - $5,200) Franchise ($187,200 - $5,200) Total Intangibles $320,000 $67,600 $182,000 $569,600