Question

Exercise 9-15 

On January 1, 2022, Sandhill Co. had a balance of $411,000 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill h indefinite life. During 2022, the company had the following additional transactions. 

Jan. 2 Purchased a patent (7-year life) $307,650. 

July 1 Acquired a 9-year franchise; expiration date July 1, 2,031, $576,000. 

Sept. 1 Research and development costs $178,500. 

Prepare the necessary entries to record the transactions related to intangibles. All costs incurred were for cash. (Record entries in the order displayed in the problem sta Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the accoun and enter o for the amounts.) 

Make an entry as of December 31, 2022, recording any necessary amortization. (Round answers to o decimal places, e.g. 125. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) 

Indicate what the intangible asset account balances should be on December 31, 2022. 

Answer 1

2.As on December 31

Journal entries

Amortization expense. 75,950

To

Franchise. 43950

Patent. 32000

3. Patents = 307650-43950

= 263700

Franchise. =576000-32000

=. $544000

Thank you

I hope you understand

Answer 2

Credit Debit $ 307,650 Date Account Titles and Explanation 01-02-2022 Patents Cash (To record purchase of patents) $ 307,650 $ 576,000 07-01-2022 Franchise Cash (To record franchise acquired) $ 576,000 $ 178,500 09-01-2022 Research and Development expense Cash (To record research and development costs) $ 178,500 Credit Debit $ 75,950 Date Account Titles and Explanation Dec-31 Amortization expense Franchise ($576,000/9*6/12 Patents ($307,650/7) (To record the amortization expense) $ 32,000 $ 43,950 Patents = $307,650-$43,950 = $263,700 Franchise = $576,000-$32,000 = $544,000