Exercise 10-1 Gill Cornpany, organizedn 2017, has the follawing transactions rel

Question

Exercise 10-1 Gill Cornpany, organizedn 2017, has the follawing transactions related to intangible asset 12/17 Purchased patent (5-year lfe 4/1/17 Goodwil purchased Cindefinite life) 390,000 360,000 600,000 171,000 1/17 12 yar franchise; expiration date 7/1/2,029 9/1/17 Research and develcpment costs Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make the adjusting entries as of December 31, 2017, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do ndent maually Record journal entries inhe order presented in the problen. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Date Aocount Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS

Explanation / Answer

JOURNAL ENTRIES FOR ACQUISITION AND AMORTIZATION 01-02-2017 Patents 380000 Cash 380000 04-01-2017 Goodwill 360000 Cash 360000 07-01-2017 Franchise 600000 Cash 600000 09-01-2017 Research and development expense 171000 Cash 171000 12/31/2017 Amortization expense--Patents 76000 Patents (380000/5) 76000 12/31/2017 Goodwill not to be written off, as it has indefinite life. 12/31/2017 Amortization expense-Franchise 25000 Franchise ((600000/12)*6/12) 25000 ENDING BALANCES AS AT 12/31/17 Patents (380000-76000) 304000 Goodwill 360000 Franchises (600000-25000) 575000 Research and development 0

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