Reference no: EM13588879

Dolphin 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 2013 and 2014.

Intangible Assets

3/1/13                   10-year franchise agreement; expires 2/28/24                        $ 60,000

3/1/13                   Organization costs                                                                       7,000

4/1/13                   Advance payment for 2 years for office space                             24,000

6/30/13                Purchased a patent (8-year life)                                                   80,000

9/1/13                   Cost to develop a patent (10-year life)                                       40,000

12/31/13              Net operating loss for 2013                                                         61,000

6/30/14                Research and development costs                                                265,000

9/1/14                   Legal fee to successfully defend internally

developed patent                                                             13,500

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, 2014, recording any necessary amortization and reflecting all balances accurately as of that date. (Ignore income tax effects.)