Question

Marshall Company, organized in 2016, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2017.

1/2/17		Purchased patent (8-year life)		$350,000
4/1/17		Purchase goodwill (indefinite life)		360,000
7/1/17		Purchased franchise with 10-year life; expiration date 7/1/27		450,000
8/1/17		Payment of copyright (5-year life)		156,000
9/1/17		Research and development costs		215,000
				$1,531,000 -Prepare the necessary entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. (Credit account titles are automatically indented when 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.) -Make the entry as of December 31, 2017, recording any necessary amortization. (Credit account titles are automatically indented when 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.). -Reflect all balances accurately as of December 31, 2017. use straight line amortization Show work please!

Answer 1

Answer

Journal Entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles:

Particulars	Dr	Cr
Patents	350,000
Goodwill	360,000
Franchise	450,000
Copyright	156,000
Research and Development Expense	215,000
Intangible Assets		1,531,000
(Being Record Intangible Assets)
Amortization Expense	79,250
Patents ($350,000/8)		43,750
Franchise ($450,000/10 × 6/12)		22,500
Copyright ($156,000/5 × 5/12)		13,000
(Being necessary amortization expenses record)

Balance of Intangible Assets as of December 31, 2017:

Particulars	Amount
Patents $350,000 - $43,750	306,250
Goodwill	360,000
Franchise $450,000 - $22,500	427,500
Copyright $156,000 - $13,000	143,000