Janes Company provided the following information on intangible assets: A patent was purchased from the Lou Company for $1,700,000 on January 1, 2016. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $550,000 when Lou sold it to Janes. During 2018, a franchise was purchased from the Rink Company for $700,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase. Janes incurred research and development costs in 2018 as follows: Materials and supplies $ 160,000 Personnel 200,000 Indirect costs 80,000 Total $ 440,000 Effective January 1, 2018, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years. Required: 1. Prepare the entries necessary for years 2016 through 2018 to reflect the above information. 2. Prepare a schedule showing the intangible asset section of Janes’s December 31, 2018, balance sheet. rev: 11_30_2018_QC_CS-149981 Next Visit question mapQuestion 3 of 16 Total3 of 16 Prev
1.
Date | General Journal | Debit | Credit |
Jan. 1, 2016 | Patent | 1700000 | |
Cash | 1700000 | ||
(To record purchase of patent) | |||
Dec. 31, 2016 | Amortization expense ($1700000/10) | 170000 | |
Patent | 170000 | ||
(To record amortization expense) | |||
Dec. 31, 2017 | Amortization expense | 170000 | |
Patent | 170000 | ||
(To record amortization expense) | |||
2018 | Franchise | 700000 | |
Cash | 700000 | ||
(To record purchase of franchise) | |||
2018 | Research and development expense | 440000 | |
Cash | 440000 | ||
(To record research and development costs incurred) | |||
Dec. 31, 2018 | Amortization expense [($1700000 - $340000)/5] | 272000 | |
Patent | 272000 | ||
(To record amortization expense) | |||
Dec. 31, 2018 | Amortization expense ($700000/10) | 70000 | |
Franchise | 70000 | ||
(To record amortization expense) |
Note: The change in estimate of the life of the patent is a change in an accounting estimate and is accounted for prospectively by amortizing the remaining book value over the revised estimated life.
2.
Janes Company | |
Partial Balance Sheet | |
December 31, 2018 | |
Assets | |
Intangible assets: | |
Patents | 1088000 |
Franchise | 630000 |
Total intangible assets | 1718000 |
Janes Company provided the following information on intangible assets: A patent was purchased from the Lou...
Janes Company provided the following information on intangible assets: A patent was purchased from the Lou Company for $1,050,000 on January 1, 2019. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $420,000 when Lou sold it to Janes. During 2021, a franchise was purchased from the Rink Company for $570,000. The contractual life of the franchise is 10 years and Janes...
Janes Company provided the following information on intangible assets: A patent was purchased from the Lou Company for $1,400,000 on January 1, 2019. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $490,000 when Lou sold it to Janes. During 2021, a franchise was purchased from the Rink Company for $640,000. The contractual life of the franchise is 10 years and Janes...
Janes Company provided the following information on intangible assets: A patent was purchased from the Lou Company for $1,550,000 on January 1, 2019. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $520,000 when Lou sold it to Janes. During 2021, a franchise was purchased from the Rink Company for $670,000. The contractual life of the franchise is 10 years and Janes...
anes Company provided the following information on intangible assets: A patent was purchased from the Lou Company for $1,600,000 on January 1, 2019. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $530,000 when Lou sold it to Janes. During 2021, a franchise was purchased from the Rink Company for $680,000. The contractual life of the franchise is 10 years and Janes...
Janes Company provided the following information on intangible assets:A patent was purchased from the Lou Company for $1,650,000 on January 1, 2019. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $540,000 when Lou sold it to Janes.During 2021, a franchise was purchased from the Rink Company for $690,000. The contractual life of the franchise is 10 years and Janes records a...
Janes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $1,400,000 on January 1, 2016. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $490,000 when Lou sold it to Janes. b. During 2018, a franchise was purchased from the Rink Company for $640,000. The contractual life of the franchise is 10 years...
Janes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $950,000 on January 1, 2016. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $400,000 when Lou sold it to Janes b. During 2018, a franchise was purchased from the Rink Company for $550,000. The contractual life of the franchise is 10 years...
Janes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $1,250,000 on January 1, 2019. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $460,000 when Lou sold it to Janes. b. During 2021, a franchise was purchased from the Rink Company for $610,000. The contractual life of the franchise is 10 years...
Exercise 11-18 Amortization (LO11-4, 11-5] Janes Company provided the following information on intangible assets a. A patent was purchased from the Lou Company for $1650,000 on January 2016 Janes estimated the remaining useffe of the patent to be 10 years. The patent was carried on Lou's accounting records at a netbook value of $540,000 when Lou sold to Janes b During 2018, a franchise was purchased from the Rink Company for $590.000 The contractual life of the franchise is 10...
Intangibles: Balance Sheet Presentation and Income Statement Effects Valen Company has provided information on intangible assets as follows: A patent was purchased from the Lou Company for $1,410,000 on January 1, 2015. Valen estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $1,130,000 when Lou sold it to Barb. During 2016, a franchise was purchased from Rink Company for $330,000. In addition, 5%...