Question

The following information concerns the intangible assets of Epstein Corporation: On June 30, 2018, Epstein completed...

The following information concerns the intangible assets of Epstein Corporation: On June 30, 2018, Epstein completed the acquisition of the Johnstone Corporation for $1,520,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,300,000. Included in the assets purchased from Johnstone was a patent that was valued at $67,200. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years. Epstein acquired a franchise on October 1, 2018, by paying an initial franchise fee of $168,000. The contractual life of the franchise is 10 years.

Required: 1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2018.

2. Prepare the intangible asset section of the December 31, 2018, balance sheet.

Homework Answers

Answer #1
1
Debit Credit
To record amortization of goodwill.
No journal entry required 0
         No journal entry required 0
To record amortization of patent
Amortization expense 4200 =67200/8*6/12
         Patent 4200
To record amortization of franchise
Amortization expense 4200 =168000/10*3/12
        Franchise 4200
2
Balance Sheet
December 31, 2018
Intangible assets:
Goodwill 220000 =1520000-1300000
Patent 63000 =67200-4200
Franchise 163800 =168000-4200
Total intangibles 446800
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