Question

Exercise 9-10 a-b (Part Level Submission) Crane Ltd. has these transactions related to intangible assets and goodwill In 2018, its first year of operations: Jan. 2 Purchased a patent with an estimated useful life of five years for $37,540. The company that sold the patent to Collins registered the patent 10 years ago. Apr. 1 Acquired another company and recorded goodwill of $293,500 as part of the purchase. July 1 Acquired a franchise for $220,000. The franchise agreement is renewable without charge and not expected to expire. Sept. 1 Incurred research costs of $137,100. 30 Incurred development costs of $53,300. A marketable product has been identified and resources have been secured so that production will start next year. Dec. 31 Recorded annual amortization. 31 Tested the intangible assets for impairment. Recoverable amounts exceeded carrying amounts for all intangible assets. Also tested goodwill and determined that it had a recoverable amount of $287,650. Prepare the entries to record the abave transactions. Assume all costs incurred during January through September were incurred for cash. (Credit account titles are automatically indented when the amount is entered. Do not Indent manually. Round answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record amortization expense) (To record goodwil impairment)

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Answer 1

Credit Credit Date Jan. 2 Debit $37,540 Date Sep. 30 Accounts Patents Cash (To purchase patents for cash) Accounts Debit Develepment Costs $53,300 Cash (To record development costs paid by cash) $37,540 $53,300 Apr. 1 $293,500 Dec. 31 ($37540 / 5 years] Goodwill Cash (To pay cash for goodwill) $293,500 Amortization Expense $7,508 Accumulated Amortization - Patents (To record amortization expense on patents) $7,508 Jul. 1 Dec. 31 $5,840 [$293500 - $287660] Franchises $228,800 Cash (To purchase franchise for cash) $228,800 Impairment Loss Goodwill (To record goodwill impairment) $5,840 Sep. 1 Research Expenses $137,100 Cash (To record research expenses paid by cash) $137,100