Explore BrainMass

Explore BrainMass

    Reichenbach Co., organized in 2009, has set up a single acco

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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 incorporation fee, $1,000,
    and related legal fees of organizing, $5,000 (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 costs 160,000

    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. (Ignore income tax effects.)

    © BrainMass Inc. brainmass.com June 4, 2020, 2:04 am ad1c9bdddf
    https://brainmass.com/business/leasing/reichenbach-co-organized-in-2009-has-set-up-a-single-acco-436121

    Solution Preview

    Solution attached for proper format.

    Franchises 48,000
    Prepaid Rent 24,000
    Retained Earnings (Organization Costs of
    $6,000 in 2009)
    6,000
    Retained Earnings ...

    Solution Summary

    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 incorporation fee, $1,000,
    and related legal fees of organizing, $5,000 (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 costs 160,000

    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. (Ignore income tax effects.)

    $2.19

    ADVERTISEMENT