Janes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $700,000 on January 1, 2022. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $350,000 when Lou sold it to Janes. b. During 2024, a franchise was purchased from the Rink Company for $500,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase. c. Janes incurred research and development costs in 2024 as follows: Materials and supplies Personnel Indirect costs Total $ 140,000 180,000 60,000 $ 380,000 d. Effective January 1, 2024, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years. Required: 1. Prepare the entries necessary for years 2022 through 2024 to reflect the above information. 2. Prepare a schedule showing the intangible asset section of Janes's December 31, 2024, balance sheet.
Janes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $700,000 on January 1, 2022. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $350,000 when Lou sold it to Janes. b. During 2024, a franchise was purchased from the Rink Company for $500,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase. c. Janes incurred research and development costs in 2024 as follows: Materials and supplies Personnel Indirect costs Total $ 140,000 180,000 60,000 $ 380,000 d. Effective January 1, 2024, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years. Required: 1. Prepare the entries necessary for years 2022 through 2024 to reflect the above information. 2. Prepare a schedule showing the intangible asset section of Janes's December 31, 2024, balance sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Janes Company provided the following information on intangible assets:
a. A patent was purchased from the Lou Company for $700,000 on January 1, 2022. Janes estimated the remaining useful life of the
patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $350,000 when Lou sold it to
Janes.
b. During 2024, a franchise was purchased from the Rink Company for $500,000. The contractual life of the franchise is 10 years and
Janes records a full year of amortization in the year of purchase.
c. Janes incurred research and development costs in 2024 as follows:
Materials and supplies
Personnel
Indirect costs
Total
$ 140,000
180,000
60,000
$ 380,000
d. Effective January 1, 2024, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased
from Lou is only five more years.
Required:
1. Prepare the entries necessary for years 2022 through 2024 to reflect the above information.
2. Prepare a schedule showing the intangible asset section of Janes's December 31, 2024, balance sheet.
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