Question

Exercise 9-12 On January 1, 2017, Blossom Company had a balance of $388,000 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. goodwill had an indefinite life. During 2017, the company had the following additional transactions. Jan. 2 July 1 Sept. 1 Purchased a patent (5-year life) $284,550. Acquired a 9-year franchise; expiration date July 1, 2026, $626,400. Research and development costs $182,500. 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 statement. 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.) Date Account Titles and Explanation Debit Credit

Answer 1

Date	Account Title and Explanation	Debit	Credit
Jan 2	Patent	284,550
	Cash		284,550
July 1	Franchise	626,400
	Cash		626,400
Sept 1	Research and development	182,500
	Cash		182,500

Amortization Expense :-

Patent = 284,550/5 = 56,910

Franchise = 626,400/9 x 6/12 = 34,800

Account Title and Explanation	Debit	Credit
Amortization Expense	91,710
Patent		56,910
Franchise		34,800

Balance at December 31, 2017 :-

Patent = 284,550 - 56,910 = $227,640

Franchise = 626,400 - 34,800 = $591,600