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    intern12's Avatar
    intern12 Posts: 2, Reputation: 1
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    #1

    Nov 4, 2012, 06:54 PM
    How to prepare entries to record intangibles
    Herzogg Company, organized in 2008, has the following transactions related to intangible
    Assets.
    1/2/08 Purchased patent (7-year life) $560,000
    4/1/08 Goodwill purchased (indefinite life) 360,000
    7/1/08 10-year franchise; expiration date 7/1/2018 440,000
    9/1/08 Research and development costs 185,000
    Instructions
    Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make
    The adjusting entries as of December 31, 2008, recording any necessary amortization and reporting all intangible assets balances as of to that date
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    Nov 4, 2012, 08:50 PM
    An old accounting adage; if they exist they shouldn't and if they don't they should

    So with that in mind and the usual rules for amortisation in play what do you want to know
    intern12's Avatar
    intern12 Posts: 2, Reputation: 1
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    #3

    Nov 6, 2012, 09:04 PM
    Well I would like to know how to prepare the entries from the transactions
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #4

    Nov 6, 2012, 09:46 PM
    Well they were all assets and they were all purchased for cash so the initial entries are simple;
    Debit asset credit cash
    The assets will be amortised according to life expectations;
    Debit expense, credit provision for amortisation
    With goodwill and research and development costs you will have to make a judgement call, I would say nothing over three years
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