Question

On January 1, 2017, Wildhorse Co. had a balance of $339,000 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill had an indefinite life. During 2017, the company had the following additional transactions.

Jan. 2 Purchased a patent (6 year life) $372,750.
July 1 Acquired a 9.year franchise; expiration date July 1, 2026, $S61,600.
Sept.1 Research and development $188,000.

a. Prepare a tabular summary to record the January 1 balance in the Goodwill account as well as the 2017 transactions related to intangibles. All costs incurred were for cash.
b. Record any necessary amortization as of December 31, 2017.

Answer 1

Answer:

The question is not complete for instance the acquired franchise  has a value of $561500 not $S61,600.

Find attached correct question.

From an accounting equation point of view,all the transactions including goodwill have been tabulated as found in the attached spreadsheet.

Also,the necessary amortizations taking note of when intangibles were acquired in the year have been computed in the attached as well.

Explanation:

Amortization is not calculated on research and development as the cost is expensed immediately and not capitalized.