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    Entries to Record Amortization of Intangible Assets

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    Powerglide Company, 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 2010.

    02/01/2010 Purchased patent (8-year life) $380,000
    01/04/2010 Goodwill (indefinite life) 360,000
    01/07/2010 Purchased franchise with 10-year life; expiration date 7/1/20 450,000
    01/08/2010 Payment of copyright (5-year life) 156,000
    01/09/2010 Research and development costs 215,000

    Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles.
    Make the entries as of December 31, 2010, recording any necessary amortization and reflecting all balances accurately as of that date. (Use straight-line amortization.)

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    Solution Summary

    The solution explains the calculations for amortization of intangible assets