Premium Essay

Ac551

In: Business and Management

Submitted By denise2008
Words 1097
Pages 5
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.

7/1/09 8 year franchise; expiration date 6/30/17 48,000
10/01/09 Advance payment in laboratory space(2 year lease) 24,000
12/31/09 Net Loss for 2009 including statement incorporation fee, 1000, and related legal fees of organizing, $5000(all fees Occurred in 2009.) 16,000 1/2/2010 Patient purchased (10-year life) 84,000
3/1/2010 cost of developing a secret formula (indefinite life) 75,000
4/1/2010 Goodwill purchased (indefinite life) 278,400
6/1/2010 Legal fee for successful defense of patent purchased above 12,650 9/1/2010 Research and development costs 160,000

Prepare the necessary entries to clear the Intangibles Assets account and set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2010, recoding any necessary amortization and reflecting all balances accurately as of that date. Ignore income tax effects.

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

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