Kopke Company, organized in 2012, has these transactions related to intangible assets in that year:
|Jan. 2||Purchased a patent (5-year life) $280,000.|
|Apr. 1||Goodwill acquired as a result of purchased business (indefinite life) $360,000.|
|July, 1||Acquired a 9-year franchise; expiration date July 1, 2021, $540,000.|
|Sept. 1||Research and development costs $185,000.|
(a) Prepare the necessary entries to record these transactions related to intangibles. All costs incurred were for cash.
(b) Make the entries as of December 31, 2012, recording any necessary amortization.
(c) Indicate what the balances should be on December 31, 2012.
Amortization Of Intangible Assets
The process of expensing the cost of an intangible asset over the asset's estimated life for tax or accounting purposes is known as intangible asset amortisation. Patents and trademarks, for example, are amortised into a separate expense account. Depreciation is used to depreciate tangible assets.
Answer and Explanation: 1
|Jan 2||Patent a/c dr.||280,000|
|To cash a/c||280,000|
|(being patent acquired for cash)|
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fromChapter 11 / Lesson 9
Intangible assets do not have physical properties but do have value. Explore the definition and examples of intangibles compared with tangible assets, intangible asset valuation, creating journal entries, and amortization of assets like copyrights, patents, and goodwill.