The following information concerns the intangible assets of Epstein Corporation:
a. On June 30, 2011, Epstein completed the purchase of the John stone Corporation for $2,000,000 in cash. The fair value of the net identifiable assets of John stone was $1,700,000.
b. Included in the assets purchased from John stone 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.
c. Epstein acquired a franchise on October 1, 2011, by paying an initial franchise fee of $200,000. The contractual life of the franchise is 10 years.
Required:
1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2011.
2. Prepare the intangible asset section of the December 31, 2011, balance sheet.