Amortization of Intangibles

On January 1, 2013, Boulder Investments Inc. acquired a franchise to operate a Burger Doodle restaurant. Boulder paid $225,000 for a 10-year franchise and incurred organization costs of $15,000.

Required:

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1. Prepare the journal entry to record the cash payment for the franchise fee and the organization costs.

2013 Jan. 1

(Record purchase of franchise)

2013 Jan. 1

(Record organizational costs)

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2. Prepare the journal entry to record the annual amortization expense at the end of the first year.

2013 Dec. 31

(Record amortization of franchise)