Question

Exercise 9-12 On January 1, 2017, Carla Vista Co. had a balance of $321,500 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill had an indefinite life. During 2017, the company had the following additional transactions. Jan. 2 Purchased a patent (6-year life) $376,950. July 1 Acquired a 8-year franchise; expiration date July 1, 2025, $547,200. Sept. 1 Research and development costs $185,500. 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 0 for the amounts.) Date Account Titles and Explanation Debit Credit Show List of Accounts Link to Text Make an entry as of December 31, 2017, recording any necessary amortization. (Round answers to 0 decimal places, e.g. 125. 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 0 for the amounts.) Account Titles and Explanation Debit Credit Show List of Accounts Link to Text Indicate what the intangible asset account balances should be on December 31, 2017. Patent $ Franchise $

Answer 1

Jan 2	Patents	376950
	Cash		376950
July 1	Franchise	547200
	Cash		547200
Sep 1	Research and development expense	185500
	Cash		185500
2
Dec 31	Amortization expense	97025
	Patents		62825	=376950/6
	Franchise		34200	=547200/8*6/12
3
	Patent	314125		=376950-62825
	Franchise	513000		=547200-34200