80.2K

Verified Solution

Link Copied!

12-1

Problem 12-1

Reichenbach Co., organized in 2013, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2014 and 2015.

Intangible Assets
7/1/14		8-year franchise; expiration date 6/30/22		$51,200
10/1/14		Advance payment on laboratory space (2-year lease)		26,280
12/31/14		Net loss for 2013 including state incorporation fee, $2,000,
		and related legal fees of organizing, $5,050 (all fees incurred in 2013)		17,650
1/2/15		Patent purchased (10-year life)		89,920
3/1/15		Cost of developing a secret formula (indefinite life)		74,460
4/1/15		Goodwill purchased (indefinite life)		282,450
6/1/15		Legal fee for successful defense of patent purchased above		19,435
9/1/15		Research and development costs		169,200

Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2015, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round all answers to 0 decimal places, e.g. 8,564.)

account titles and explanation	Debit	Credit
(to clear the intangible assets)	keep blank	keep blank
(to record current amount for Franchises)	keep blank	keep balnk
(To record current amount for rents)	keep blank	keep blank
(To record current amount for patents)	keep blank	keep blank

List of Accounts available for above:

Accounts Payable Accounts Receivable Advertising Expense Amortization Expense Buildings Cash Computer Software Costs Copyrights Discount on Bonds Payable Equipment Franchises Goodwill Income Summary Intangible Assets Interest Expense Inventory Land Legal Fees Expense Loss on Impairment Long-term Notes Payable No Entry Organization Expense Paid-in Capital in Excess of Par - Common Stock Patents Patent Expense Prepaid Rent Recovery of Loss from Impairment Rent Expense Rent Receivable Rent Revenue Research and Development Expense Retained Earnings Trade Names Trademarks

Reflecting all balances accurately as of that date. (Ignore income tax effects.)

	$
	$
	$
	$

(Patents, Prepaid Rent, Goodwill, or Franchises for accounts above)

Answer & Explanation Solved by verified expert

See Answer