As the recently appointed auditor for Bryan Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2020, are prepared. The controller for Bryan Corporation mentions that only one account is kept for intangible assets. The account is shown below.Intangible Assets DebitCreditBalanceJan. 4Research and development costs940,000 940,000Jan. 5Legal costs to obtain patent 75,000 1,015,000Jan. 31Payment of 7 months' rent on property leased by Bryan 91,000 1,106,000Feb. 11Premium on common stock 250,000 856,000March 31Unamortized bond discount on bonds due March 31, 204084,000 940,000April 30Promotional expenses related to start-up of business207,000 1,147,000June 30Operating losses for first 6 months241,000 1,388,000InstructionsPrepare the entry or entries necessary to correct this account. Assume that the patent has a useful life of 10 years.

Intangible assets: These are the long-term assets which are not physical in nature, but possess…

Answered: As the recently appointed auditor for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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As the recently appointed auditor for Bryan Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2020, are prepared. The controller for Bryan Corporation mentions that only one account is kept for intangible assets. The account is shown below.

Intangible Assets
		Debit	Credit	Balance
Jan. 4	Research and development costs	940,000		940,000
Jan. 5	Legal costs to obtain patent	75,000		1,015,000
Jan. 31	Payment of 7 months' rent on property leased by Bryan	91,000		1,106,000
Feb. 11	Premium on common stock		250,000	856,000
March 31	Unamortized bond discount on bonds due March 31, 2040	84,000		940,000
April 30	Promotional expenses related to start-up of business	207,000		1,147,000
June 30	Operating losses for first 6 months	241,000		1,388,000

Instructions

Prepare the entry or entries necessary to correct this account. Assume that the patent has a useful life of 10 years.

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