On January 1, 2022, Haley Company had a balance of $360,000 of goodwill on its balance sheet

Question:

On January 1, 2022, Haley Company had a balance of $360,000 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 2022, the company had the following additional transactions.

Jan. 2 Purchased a patent (5-year life) $280,000.

July 1 Acquired a 9-year franchise; expiration date July 1, 2031, $540,000.

Sept. 1 Research and development costs $185,000.

Instructions

a. Prepare the necessary entries to record the transactions related to intangibles. All costs incurred were for cash.

b. Make the entries as of December 31, 2022, recording any necessary amortization.

c. Indicate what the intangible asset account balances should be on December 31, 2022.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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