Question

On January 1, 2017, Sunland Company had a balance of $380,000 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior years. The goodwill had an indefinite. During 2017, the company had the following additional transactions. Jan 2 Purchased a patent (5-year life) $260.150. July 1 Acquired a 9-year franchises expiration date July 1, 2026, 5576.000, Sept. 1 Research and development costs $17.500 (a) Prepare a tabular summary to record the January 1 balance in the Goodwill account as well as the 2017 transactions related to intangibles. All costs incurred were for cash. (b) Record any necessary amortization as of December 31, 2017 (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity place a negative sign for parentheses) in front of the amount entered for the particular Art, Liability or Equillem was reduced.) Assets Liabilities + Stockholders' Equity Retained Earnings Cash Patents Franchise Goodwill + Common Stock + Revenue Expense Dividend + 5. 5 Jan 2 July Sept. 1 (b) Dec. 31 Indicate what the intangible account balance should be on December 31, 2017 Patent 5 Franchise 5 ox ENG 10:45 AM 6/25/2020 Goodwill O search

Answer 1

Assets Liabilities Cash + Patents + Franchise Stockholders Equity + Common Stock + Revenue - Expense - Dividend 388000/- + Goodwill 388000/- Credit Date Account title Jan.2 Patent Cash Debit $360,150 (a) + + $360,150 Bal. Jan. 2 July 1 Sept.1 Dec.31 360150 + 576000 + -360150 + -576000+ -178500 + 0 + $ 576,000 178500 - 104030 July.1 Franchise Cash (b) -720301 -32000 + $ 576,000 $ 178,500 Sept. 1 R&D Expenses Cash $ 178,500 *Patent-Asset-Increases *Franchise-Asset-Increases *Amort. Expense-Expense-Increases *Amort.Expense-Expense-Increases * Cash-Decreases * Cash-Decreases * Cash-Decreases * *Patent-Asset-decreases $ 104,030 * Franchise-Asset-decreases $ 72,030 Dec.31 Amortization expense Patent (360150/5) Franchise (576000/9)*6/12 $ 32,000 Balance at the end Dec, 31, 2017 Patent (360150 - 72030) Franchise (576000 - 32000) Goodwill given) S S S 288,120 544,000 388,000

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