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 $1,460,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,250,000.
2. Included in the assets purchased from Johnstone was a patent that was valued at $73,800. The remaining legal life of the patent was 14 years, but Epstein believes that the patent will only be useful for another nine years.
3. Epstein acquired a franchise on October 1, 2021, by paying an initial franchise fee of $180,400. The contractual life of the franchise is 11 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

	1
		Debit	Credit
December 31, 2021	NO journal entry required
December 31, 2021	Amortization expense	4100		=73800/9*6/12
	Patent		4100
December 31, 2021	Amortization expense	4100		=180400/11*3/12
	Franchise		4100
2
	Partial Balance Sheet
	December 31, 2021
	Intangible assets:
	Goodwill	210000		=1460000-1250000
	Patent	69700		=73800-4100
	Franchise	176300		=180400-4100
	Total intangibles	456000