Reichenbach Co., organized in 2009, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2009 and 2010.
Intangible Assets
- 7/1/09 8-year franchise;expiration date 6/30/17 $48,000
- 10/1/09 Advance payment on laboratory space (2-year lease) $24,000
- 12/31/09 Net loss for 2009 including state incoporation fee,
- $1000, and related legal fees of organizing, $5000
- (all fees incurred in 2009) $16,000
- 1/2/10 Patent purchased (10-year life) $84,000
- 3/1/10 Cost of developing a secret formula (indefinite life) $75,000
- 4/1/10 Goodwill purchased (indefinite life) $278,400
- 6/1/10 Legal fee for successful defense of patent purchased
- above $12,650
- 9/1/10 Research and development cost $160,000
Instructions: Prepare the necessary entries to clear the Intangible Assets account and to set up seperate accounts for distinct types of intangibles. Makethe entries as of December 31, 2010, recording any necessary amortization and reflecting all balances accurately as of that date.