E1-23 Hootie and the Blow Fish, Inc., organized in 2002, has the following transactions related to intangible assets.
1/2/02 Purchased patent (7-year life) $490,000
4/1/02 Goodwill purchased (indefinite life) 360,000
7/1/02 10-year franchise; expiration date 7/1/2012 420,000
9/1/02 Research and development costs 185,000
Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make the entries as of December 31, 2002, recording any necessary amortization and reflecting all balances accurately as of that date.
490,000 / (7 years) = 70,000
Jan. 02 Amortization Expense-Patents 70,000
(To record patent amortization)
April 02 Cash??? 360,000
Goodwill purchased 360,000
Research and development costs?
Intangible Assets are noted.