Question

Nelson Company, organized in 2017, has these transactions related to intangible assets in that year: Jan. 2 Purchased a patent (5-year life) $325,000. Apr. 1 Goodwill purchased (indefinite life) $360,000. July 1 Acquired a 9-year franchise; expiration date July 1, 2026, $720,000. Sept. 1 Research and development costs $185,000.

1. Prepare the necessary entries to record these intangibles. All costs were for cash.
2. Make the entries as of December 31, 2017, recording any necessary amortization.

Answer 1

The answer and procedures of the exercise are attached in the following images.

Explanation

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a two sheets with the formulas indications.