Question

Problem 11-8 Amortization; partial period [LO11-4) The following information concerns the intangible assets of Epstein Corporation: a. On June 30, 2018, Epstein completed the acquisition of the Johnstone Corporation for $1,400,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,200,000. b. Included in the assets purchased from Johnstone was a patent that was valued at $56,000. 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, 2018, by paying an initial franchise fee of $144,000. 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, 2018 2. Prepare the intangible asset section of the December 31, 2018, balance sheet.

Answer 1

Answer
1
Date	Explanation	Debit	Credit
December 31, 2018	NO journal entry required
December 31, 2018	Amortization expense	$          4,000		56000/7*6/12
	Patent		$     4,000
December 31, 2018	Amortization expense	$          4,000		144000/9*3/12
	Franchise		$     4,000
2
	Partial Balance Sheet
	December 31, 2021
	Intangible assets:
	Goodwill	$      200,000		1400000-1200000
	Patent	$        52,000		56000-4000
	Franchise	$      140,000		144000-4000
	Total intangibles	$      392,000