Question

The following information concerns the intangible assets of Epstein Corporation:

1. On June 30, 2021, Epstein completed the acquisition of the Johnstone Corporation for $1,880,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,600,000.
2. Included in the assets purchased from Johnstone was a patent that was valued at $76,800. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years.
3. Epstein acquired a franchise on October 1, 2021, by paying an initial franchise fee of $192,000. The contractual life of the franchise is 10 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.

Partial Balance Sheet December 31, 2021 Intangible assets: Goodwill Patent Franchise Total intangibles

Answer 1

2569er Раge: on Iotangi bles not phytcal The assets 4hal oie natune, and addValue to the business in the Bataore fened to Euompledus, paient coryht in tangible asset aUie -Amotzation 9E can be determined byolloaing ays parentage 91ewenue method JL sdetermined a the to Cu1rent and anticipatad ralio ent 1evenue S1evenuea stroightline method ove Ae seu tthe Requind cnd adjuling joinal asset entsues ea to esid the ntargileles at december amotzatfon expente

calulate the value good wil! 02 goo iisnot amoiiled considenation exchanged 2 1880000 tess netidentfiable assel - p 16o000 Value Good will $1600000 1880000 - $380000 book vale 980000 Reedid the joun amoi2ahon d fhe patent entay Account title& caplanation Amdiation Debit redit ५600 t480o patent note oihing determine the amotization expense fo six 30,ao2l- becembey 31 oa months une patent value Amd2ation expense 76800 8 2

Pageo3 4800 cxpen six m onths october,aoai- december 31,202) determine the amotzation Amo tization expenie Fruanchise value 2 arefal fe 192000 (2 Recid theownal anty a the amoatization epense the onchise Aeyear AccOunt title aplanation fmon zation expense Dehit Cedit 4800 4800 Fanchise (Q intangible atet section d the decembeg 31,202/ determine the am ount intangibles oiginal Value ffer deporectabion -partiaulers value elepeiatien f) 76800-4800 patont 4800 76800 72.000 92000 48oo anchise 4800 92, 00o = 187200

Родe : оy Settion the porepare the intangible autet balante sheet december 21 ,aoa fotangible asets Good will Amount 8000o patent 72 000 Tanchise 8200 Total 539 200