Question

Exercise 9-12

On January 1, 2017, Carla Vista Co. had a balance of $347,500 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) $332,850.
July 1 Acquired a 10-year franchise; expiration date July 1, 2027, $604,800.
Sept. 1 Research and development costs $187,500.

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
choose a transaction date

1/2/17
7/1/17
9/1/17
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
choose a transaction date

1/2/17
7/1/17
9/1/17
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
choose a transaction date

1/2/17
7/1/17
9/1/17
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount

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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
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount

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Indicate what the intangible asset account balances should be on December 31, 2017.

Patent
$enter Patent in dollars
Franchise
$enter Franchise in dollars

Answer 1

1/2/17	Patents	332850
	Cash		332850
7/1/17	Franchise	604800
	Cash		604800
9/1/17	Research and Development expense	187500
	Cash		187500
2
12/31/17	Amortization expense	85715
	Patents		55475	=332850/6
	Franchise		30240	=604800/10*6/12
3
	Patent	277375		=332850-55475
	Franchise	574560		=604800-30240