The following information concerns the intangible assets of Epstein Corporation: a. On June 30, 2021, Epstein completed the acquisition of the Johnstone Corporation for $2,180,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,850,000. b. Included in the assets purchased from Johnstone was a patent that was valued at $84,800. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years. c. Epstein acquired a franchise on October 1, 2021, by paying an initial franchise fee of $212,000. The contractual life of the franchise is 10 years. Required: 1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2021. a) Record the goodwill amortization? b) Record the amortization of patent? c) Record the amortization of franchise? 2. Prepare the intangible asset section of the December 31, 2021, balance sheet. Partial Balance Sheet December 31, 2021 Intangible assets: Goodwill Patent Franchise Total intangibles

The following information concerns the intangible assets of Epstein Corporation: a. On June 30, 2021, Epstein completed the acquisition of the Johnstone Corporation for $2,180,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,850,000. b. Included in the assets purchased from Johnstone was a patent that was valued at $84,800. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years. c. Epstein acquired a franchise on October 1, 2021, by paying an initial franchise fee of $212,000. The contractual life of the franchise is 10 years. Required: 1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2021. a) Record the goodwill amortization? b) Record the amortization of patent? c) Record the amortization of franchise? 2. Prepare the intangible asset section of the December 31, 2021, balance sheet. Partial Balance Sheet December 31, 2021 Intangible assets: Goodwill Patent Franchise Total intangibles

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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Question

What are the answers to Required 1a (goodwill amortization Journal Entry(, 1b (amortization of patent Journey Entry), 1c (amortization of franchise Journal Entry), and to Required 2 (fill in the Partial Balance Sheet)?

The following information concerns the intangible assets of Epstein Corporation:
a. On June 30, 2021, Epstein completed the acquisition of the Johnstone Corporation for $2,180,000 in cash. The
fair value of the net identifiable assets of Johnstone was $1,850,000.
b. Included in the assets purchased from Johnstone was a patent that was valued at $84,800. The remaining legal life
of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years.
c. Epstein acquired a franchise on October 1, 2021, by paying an initial franchise fee of $212,000. The contractual
life of the franchise is 10 years.
Required:
1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31,
2021.
a) Record the goodwill amortization?
b) Record the amortization of patent?
c) Record the amortization of franchise?
2. Prepare the intangible asset section of the December 31, 2021, balance sheet.
Partial Balance Sheet
December 31, 2021
Intangible assets:
Goodwill
Patent
Franchise
Total intangibles

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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