Question

Exercise 10-13 al-a2 (Part Level Submission) (Video) Sarasota Company, organized in 2020, has the following transactions related to intangible assets. 1/2/20 Purchased patent (5-year life) $440,000 4/1/20 Goodwill purchased (indefinite life) 360,000 7/1/20 10-year franchise 320,000 9/1/20 Research and development costs 179,000 son (al) Your answer is partially correct. Try again. ssion) Prepare the necessary entries to record those intangibles. All costs incurred were for cash. Make the adjusting entries as of Decem (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal en no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Study Date Account Titles and Explanation Debit Credit 1/2/20 Patents 440000 Cash 440000 41120 Goodwill Cash T 360000 - Franchise 320000 g Start a search o Bill i Invalid Se... Wiley PLUS... 7 Calculato

Answer 1

Solution:

Journal Entries:

Date	Accounts Titles and Explanation	Debit	Credit
1/2/2020	Patent	$ 440,000
	Cash		$ 440,000
	( Being patent Purchased)
4/1/2020	Goodwill	$ 360,000
	Cash		$ 360,000
	( Being goodwill Purchased)
7/1/2020	Franchise	$ 320,000
	Cash		$ 320,000
	( Being franchise Purchased)
9/1/2020	Research and development expense	$ 179,000
	Cash		$ 179,000
	( Being research and development cost expense)
12/31/2020	Amortization Expense	$ 104,000
	Franchise (320000/10 years * 6 Months/12 Months)		$    16,000
	Patents ( $ 440,000 / 5 years)		$    88,000
	( Being amortization expense recorded)

Notes:

1) Franchise purchased at middle of the year so half of the value is amortized in first year.