Reichenbach co organized in 2009 has set up a single, Ask an Expert

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Reichenbach Co., organized in 2009, has set up a single account forall intangible assets. The following summary discloses the debitentries that have been recorded during 2009 and 2010.

Intangible Assets:

7/1/09--8 year franchise: expiration date6/30/17 $48,000

10/1/09--Advance payment on laboratory space (2 yearlease) $24,000

12/31/09--Net loss for 2009 including state incorporation fee,$1000, and related legal fees of organizing, $5000 (all feesincurred in 2009) $16,000

1/2/10--Patent purchased (10 year) $84,000

3/1/10--Cost of developing a secret formula (indefinitelife) $75,000

4/1/10--Goodwill purchased (indefinite Life) $278,400

6/1/10--Legal fee for successful defense of patent purchasedabove $12,650

9/1/10--Research and developmentcosts. $160,000

Instructions:

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, 2010, recording any necessary amortization and reflecting all balances accurately as of that date. (Ignore income tax effects.)

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9796819

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