$417,600 364,100 456,000 150,000 226,000 $1,613,700 Account Titles and Explanati

Question

$417,600

364,100

456,000

150,000

226,000

$1,613,700

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Debit

Credit

Ivanhoe Company, 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.
1/2/17 Purchased patent (8-year life)

$417,600

4/1/17 Purchase goodwill (indefinite life)

364,100

7/1/17 Purchased franchise with 10-year life; expiration date 7/1/27

456,000

8/1/17 Payment of copyright (5-year life)

150,000

9/1/17 Research and development costs

226,000

$1,613,700

Explanation / Answer

Prepare the necessary entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles.

Note: Research and development cost is an expense and not an intangible asset.

Make the entry as of December 31, 2017, recording any necessary amortization.

Note: Goodwill has indefinite life so it will not be amortized.

Reflect all balances accurately as of December 31, 2017.

Account Titles and Explanations Debit Credit Patent 417600 Goodwill 364100 Franchise 456000 Copyright 150000 Research and development expense 226000        Intangible assets 1613700

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