Prepare necessary entries to clear intangible assets account

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Reference no: EM131970545

Problem

Reichenbach Co., organized in 2016, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2017 and 2018.

Intangible Assets
7/1/17	8-year franchise; expiration date 6/30/25	$48,000
10/1/17	Advance payment on laboratory space (2-year lease)	24,000
12/31/17	Net loss for 2017 including state incorporation fee, $1,000,
	and related legal fees of organizing, $5,000 (all fees incurred in 2017)	16,000
1/2/18	Patent purchased (10-year life)	84,000
3/1/18	Cost of developing a secret formula (indefinite life)	75,000
4/1/18	Goodwill purchased (indefinite life)	278,400
6/1/18	Legal fee for successful defense of patent purchased above	12,650
9/1/18	Research and development costs	160,000

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, 2018, recording any necessary amortization.

Reference no: EM131970545

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