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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, 2015, recording any necessary amortization and reflecting all balances accurately as of that date. (ignore Income tax effects)

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, 2015, recording any necessary amortization and reflecting all balances accurately as of that date. (ignore Income tax effects)

FINANCIAL ACCOUNTING
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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Reichenbach Co., organized in 2013, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2014 and 2015. Intangible Assets 7/1/14 10/1/14 12/31/14 1/2/15 3/1/15 4/1/15 6/1/15 9/1/15 8-year franchise; expiration date 6/30/22 Advance payment on laboratory space (2-year lease) Net loss for 2013 including state incorporation fee, $1,000, and related legal fees of organizing, $5,000 (all fees incurred in 2013) 16,000 Patent purchased (10-year life) 84,000 Cost of developing a secret formula (indefinite life) 75.000 S? 48,000 Goodwill purchased (indefinite life) Legal fee for successful defense of patent purchased above Research and development costs 24,000 278,400 12,650 160,000 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, 2015, recording any necessary amortization and reflecting. (Ignore Income tax effects.) balances accurately as of that date.
Transcribed Image Text:Reichenbach Co., organized in 2013, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2014 and 2015. Intangible Assets 7/1/14 10/1/14 12/31/14 1/2/15 3/1/15 4/1/15 6/1/15 9/1/15 8-year franchise; expiration date 6/30/22 Advance payment on laboratory space (2-year lease) Net loss for 2013 including state incorporation fee, $1,000, and related legal fees of organizing, $5,000 (all fees incurred in 2013) 16,000 Patent purchased (10-year life) 84,000 Cost of developing a secret formula (indefinite life) 75.000 S? 48,000 Goodwill purchased (indefinite life) Legal fee for successful defense of patent purchased above Research and development costs 24,000 278,400 12,650 160,000 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, 2015, recording any necessary amortization and reflecting. (Ignore Income tax effects.) balances accurately as of that date.
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