contestada

The following information concerns the intangible assets of Epstein Corporation:

a. On June 30, 2021, Epstein completed the acquisition of the Johnstone Corporation for $1,580,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,350,000.

b. Included in the assets purchased from Johnstone was a patent that was valued at $60,200. The remaining legal life of the patent was 12 years, but Epstein believes that the patent will only be useful for another seven years.

c. Epstein acquired a franchise on October 1, 2021, by paying an initial franchise fee of $154,800. The contractual life of the franchise is 9 years

Required:

1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2021.

2. Prepare the intangible asset section of the December 31, 2021, balance sheet.

Respuesta :

saqib097

Answer:

Explanation:

1)

To record amortization of goodwill

Calculation of goodwill:

Consideration exchanged                                  1,580,000  

Less: Fair value of net identifiable assets       1,350,000  

Goodwill acquired                                           230,000

The cost of goodwill is not amortized.

For Patent Ammortization = 60,200/7 = 8600 / 2 = 4300

For Franchise Ammortization = 154,800/9 = 17200 / 12 = 1433.33 * 3 = 4300

Account Title                                      Dr            Cr

Amortization expense                      4300

Patent                                                      4300

Amortization expense                     4300

Franchise                                                4300

2)

Patent = $60,200 – 4,300 = $55,900

Franchise = $154,800 – 4,300 = $150,500

                                            Balance Sheet

                                         December 31, 2021

 Intangible assets:  

 Goodwill                              230,000

 Patent                                    55,900

 Franchise                             150,500

 Total intangibles                 436,400