Question

Concord Company, organized in 2020, has the following transactions related to intangible assets.

1/2/20		Purchased patent (7-year life)		$490,000
4/1/20		Goodwill purchased (indefinite life)		360,000
7/1/20		15-year franchise		600,000
9/1/20		Research and development costs		192,000

Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make the adjusting entries as of December 31, 2020, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

b. Calculate ending balances as at 12/31/20.

		Ending balances
Patents		$enter a dollar amount
Goodwill		$enter a dollar amount
Franchises		$enter a dollar amount
Research and Development Expense		$enter a dollar amount

Answer 1

Journal Entries:

Journal Entries:
Date	Accounts Titles and Explanations	Debit	Credit
1/2/2020	Patent	$490,000
	Cash		$490,000
	(To record the purchase of patent by cash)
4/1/2020	Goodwill	$360,000
	Cash		$360,000
	(To record the purchase of goodwill by cash)
7/1/2020	Franchise	$600,000
	Cash		$600,000
	(To record the purchase of franchise by cash)
9/1/2020	Research and Development	$192,000
	Cash		$192,000
	(To record the incur of research and development costs by cash)
Adjusting Entries:
Date	Accounts Titles and Explanations	Debit	Credit
Dec. 31, 2020	Amortization Expense - Patents [($490,000/7 years * 1 year)+($600,000/15 years = $40,000*6/12 months)]	$90,000
	Accumulated Amortization - Patents		$70,000
	Accumulated Amortization - Franchise		$20,000
	(To record amortization on patents and Franchise)
Dec. 31, 2020	No amortization is record on Goodwill because it has indefinite life.
Dec. 31, 2020	No amortization is record on Research and development costs.

b) Ending balances as at 12/31/20
Patents ($490,000 - $70,000)	$420,000
Goodwill	$360,000
Franchise ($600,000 - $20,000)	$580,000
Research and Development Expenses	$192,000