Exercise 9-12 On January 1, 2017, Sandhill Co. had a balance of $411,000 of good

Question

Exercise 9-12 On January 1, 2017, Sandhill Co. had a balance of $411,000 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill had an indefinite life. During 2017, the company had the following additional transactions Jan. 2 Purchased a patent (7-year life) $307,650 July Acquired a 9-year franchise; expiration date July 1, 2,026, $576,000 Sept. Research and development costs $178,500 Prepare the necessary entries to record the transactions related to intangibles. All costs incurred were for cash. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit [choose a transaction [enter an account title] enter a debit amount] enter a credit amount] date] [enter an account title] enter a debit amount] enter a credit amount] [choose a transaction [enter an account title] enter a debit amount] enter a credit amount] date] [enter an account title] enter a debit amount] enter a credit amount] [choose a transaction [enter an account title] enter a debit amount] enter a credit amount] date] [enter an account title] enter a debit amount] enter a credit amount]

Explanation / Answer

Date Account titles & Explanations Debit Credit 2-Jan Patent 307,650 cash 307,650 1-Jul Frainchise 576,000 cash 576,000 1-Sep Research & Development expense 178,500 cash 178,500 Amortization Entry Amortization expens 43950 patent (307,650/7) 43,950 Amortization expense 32000 Franchise (576000/9*1/2) 32,000 No entry Carrying value Patent 263700 Franchise 544000

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