Question - The following information concerns the intangible assets of Epstein Corporation:
On June 30, 2016, Epstein completed the acquisition of the Johnstone Corporation for $2,000,000 in cash. The fair value of the new identifiable assets of Johnstone was $1,700,000.
Included in the assets purchased from Johnstone was a patent that was valued at $80,000. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years.
Epstein acquired a franchise on October 1, 2016 by paying an initial franchise fee of $200,000. The contractual life of the franchise is 10 years.
1. Prepare year end adjusting journal entries to record amortization expense on the intangibles at December 31, 2016
2. Prepare the intangible asset section of the Dec 31, 2016, balance sheet.