Question

Problem 7-6B Record amortization and prepare the intangible assets section (LO7-5)

[The following information applies to the questions displayed below.]

Required information Problem 7-6B Record amortization and prepare the intangible assets section (L07-5) [The following information applies to the questions displayed below.] The following information relates to the intangible assets of Lettuce Express: 0. On January 1, 2021, Lettuce Express completed the purchase of Farmers Produce, Inc., for $1,470,000 in cash. The fair value of the identifiable net assets of Farmers Produce was $1,323,000. a. Included in the assets purchased from Farmers Produce was a patent for a method of processing lettuce valued at $37,800. The original legal life of the patent was 20 years. There are still 17 years left on the patent, but Lettuce Express estimates the patent will be useful for only 9 more years. b. Lettuce Express acquired a franchise on July 1, 2021, by paying an initial franchise fee of $195,200. The contractual life of the franchise is eight years. roblem 7-6B Part 1

Answer 1

Ques 1
No.	General Journal	debit	credit
1	No journal entry required
2	Amortization expense	4200
	patents		4200
	(37800/9 years )
3	Amortization expense	12200
	Franchises		12200
	(195200/8 years *6/12 months)

2
Intangible Assets
Patents	33600
Franchises	183000
Goodwill	147000
Total Intangible Assets	363600
Workings:
Patents	37800
Less: Amortization	4200	37800/9
Net Patents	33600
Franchises	195200
Less: Amortization	12200	195200/8*6/12
Net Franchises	183000
Goodwill	147000	1470000-1323000

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