Question

Sheridan Limited organized late in 2016 and set up a single account for all intangible assets. The following summary shows the entries in 2017 (all debits) that have been recorded in intangible assets since then:

Jan. 2 Purchased patent (8-year life) $344,000

Mar.31 Costs to search for new ways to apply patent that was purchased on 21,000

Apr. 1 Purchased goodwill (indefinite life) 313,000

July 1 Purchased franchise with 10-year life; expiration date July 1, 2027, 251,000

1 Promotional cost to increase the future economic benefit of the goodwill that was purchased on Apr. 1 33,000

Aug. 1 Payment for copyright (5-year life) 134,000

1 Purchased trademark (3-year life) 14,400

1 Purchased customer list (2-year life) 8,600

Sept. 1 Research costs 238,000

$1,357,000

Required:

Prepare the necessary entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles.

Please do not copy from Chegg otherwise I have to report the answer. Explain the answer thoroughly by showing each step of the calculation.

Answer 1