E11.6B (LO 1,2,4) (Recording and Amortization of Intangibles) Parrish Company, organized in 2025, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2025: 1/2/25 4/1/25 7/1/25 8/1/25 9/1/25 Purchased patent (8-year life) Purchased goodwill (indefinite life) Purchased franchise with 10-year life; expiration date 7/1/35 Payment for copyright (5-year life) Research and development costs $ 625,000 540,000 675,000 246,000 342,500 $2,428,500 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, 2025, recording any necessary amor- tization and reflecting all balances accurately as of that date. (Use straight-line amortization.)
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- During 2022, Pfeiffer Co. purchased intangible assets and debited them all to "Intangible assets". 1-Jan Research and development costs $52,000 1-Jun Goodwill Indefinite Life $64,000 1-Oct Patent 7-Year Life $252,000 (a). Prepare a journal entry to reclassify them to an intangible asset account and/or expense account. (b). Prepare a journal entry to record amortization expense as of December 31, 2022.(Recording and Amortization of Intangibles) Parrish Company, organized in 2019, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2020: 1/2/20 Purchased patent (8-year life) $ 625,000 4/1/20 Purchased goodwill (indefinite life) 540,000 7/1/20 Purchased franchise with 10-year life; expiration date 7/1/30 675,000 8/1/20 Payment for copyright (5-year life) 246,000 9/1/20 Research and development costs 342,500 $2,428,500 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, 2020, recording any necessary amortization and reflecting all balances accurately as of that date. (Use straight-line amortization.)During 2021, ABC Co. purchased intangible assets and debited them all to "Intangible assets". $250,000 $66,000 $50,000 1-Jan Patent 7-Year Life 1-Jun Goodwill Indefinite Life 1-Oct Research and development costs (a). Prepare a journal entry to reclassify them to an intangible asset account and/or expense account. (b). Prepare a journal entry to record amortization expense as of December 31, 2021.
- Pharoah Company, organized in 2022, has the following transactions related to intangible assets. 1/2/22 Purchased patent (7-year life) $605,500 4/1/22 Goodwill purchased (indefinite life) 360,000 7/1/22 Acquired 10-year franchise; expiration date 7/1/2032 600,000 9/1/22 Incurred research and development costs 182,000 (a1) Prepare the necessary entries to record these transactions. All costs incurred were for cash. Make the adjusting entries as of December 31, 2022, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit CreditCarla Vista Company, organized in 2024, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2025. 1/2/25 Purchased patent (9-year life) Purchase goodwill (indefinite life) Purchased franchise with 10-year life; expiration date 7/1/35 4/1/25 7/1/25 8/1/25 Payment of copyright (5-year life) 9/1/25 Research and development costs $394,200 348,000 428,000 153,600 218,000 $1,541,800Current Attempt in Progress On January 1, 2023 (the first day of its fiscal year) Swifty Ltd. acquired a patent which gave the company the right to use a production process. The process met the six criteria for capitalization as an intangible asset. Below is a listing of the events relating to the patent over the five fiscal years from 2023 through 2027: 2023: 2024: on January 1, acquired the patent for the production process for a cash payment of $18,600,000, and determined that the process had an indefinite useful life. on December 31, tested the patent for impairment and determined that its fair value was $19,800,000. 2026: on December 31, tested the patent for impairment and determined that its fair value was $17,500,000. 2025: on December 31, tested the patent for impairment and determined that its fair value was $18,000,000. on January 1, determined that the useful life of the patent was no longer indefinite, its carrying amount was recoverable, its estimated remaining useful…
- D. AMORTIZATION OF INTANGIBLE ASSETS Harper Company, established in 2019, has the following transactions related to intangible assets. Date Transactions 1 Feb-19 Purchased patent (7-year useful life) $840,000 1 Apr-19 Goodwill purchased (indefinite useful life) $510,000 Instructions Prepare the necessary entries to record these intangibles. All costs incurred were for cash. b. Make the adjusting entries for any necessary amortization as of December 31, 2019. a.Carla Vista Co., organized in 2024, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2025 and 2026, C 7/1/25 10/1/25 12/31/25 1/2/26 3/1/26 4/1/26 6/1/26 9/1/26 Intangible Assets 8-year franchise; expiration date 6/30/33 Advance payment on laboratory space (2-year lease) Net loss for 2025 including state incorporation fee, $3,000, and related legal fees of organizing. $7,000 (all fees incurred in 2025) Patent purchased (10-year life) Cost of developing a secret formula (indefinite life) Goodwill purchased (indefinite life) Legal fee for successful defense of patent purchased above Research and development costs Account Titles and Explanation (To clear the Intangible Assets) (To record current amount for Franchises) (To record current amount for Rents) Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the…Required information P8-8 (Algo) Determining Financial Statement Effects of Activities Related to Various Long-Lived Assets LO8-2, 8-3, 8-6 [The following information applies to the questions displayed below.] During the current year ending on December 31, BSP Company completed the following transactions: a. On January 1, purchased a patent for $29,000 cash (estimated useful life, five years). b. On January 1, purchased the assets (not detailed) of another business for $153,000 cash, including $14,000 for goodwill. The company assumed no liabilities. Goodwill has an indefinite life. c. On December 31, constructed a storage shed on land leased from D. Heald. The cost was $29,600. The company uses straight-line depreciation. The lease will expire in six years. (Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.) d. Total expenditures for ordinary repairs and maintenance were $5,300 during the current year. e. On December 31 of the…
- For each of the following intangible assets, indicate the amount of amortization expense that should be recorded for the year 2017 and the amount of accumulated amortization on the balance sheet as of December 31, 2017. Trademark Patent Copyright Cost $35,800 $47,400 $69,200 Date of purchase 1/1/10 1/1/12 1/1/15 Useful life indefinite 10 yrs. 20 yrs. Legal life undefined 20 yrs. 50 yrs. Method SL* SL SL *Represents the straight-line method. If an amount is zero, enter "0". Amount Trademark Patent Copyright 2017 amortization expense $fill in the blank 1 0 $fill in the blank 2 5,100 $fill in the blank 3 3,780 Accumulated amortization, Dec. 31, 2017 $fill in the blank 4 0 $fill in the blank 5 30,600 $fill in the blank 6 11,340Sandhill Co., organized in 2024, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2025 and 2026. 7/1/25 10/1/25 12/31/25 1/2/26 3/1/26 4/1/26 6/1/26 9/1/26 Intangible Assets 8-year franchise; expiration date 6/30/33 Advance payment on laboratory space (2-year lease) Net loss for 2025 including state incorporation fee, $1,000, and related legal fees of organizing, $5,000 (all fees incurred in 2025) Patent purchased (10-year life) Cost of developing a secret formula (indefinite life) Goodwill purchased (indefinite life) Legal fee for successful defense of patent purchased above Research and development costs $60,000 26,400 12,400 84,400 85,000 277,000 12,995 180,000 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, 2026, recording any necessary amortization. (Ignore income tax…d. Polycarp Ltd adopts revaluation model for subsequent measurement of its intangible assets in accordance with IAS 38: Intangible assets. The policy of Polycarp is to revalue its intangible asset at the end of each year. An intangible asset with an estimated useful life of 9 years was acquired on 1 January 2018 for GH¢45,000. It was revalued to GH¢54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on that date. As at 31 December 2019, the asset was revalued at GH¢32,000. Required: Discuss the accounting treatment required in 2018 and 2019 financial statements.