Blue Spruce Corp., a public company incorporated on June 28,2019, set up a single account for all of its intangible assets. The following summary discloses the debit entries that were recorded during 2019 and 2020 in that account: July Oct. Dec. 1. 2019 1 31 $48.000 28,000 15. 2020 1 Feb Mar. Apr. June Dec. INTANGIBLE ASSETS-BLUE SPRUCE 8-year franchise; expiration date of June 30, 2027 Advance payment on office lease (2-year lease) Net loss for 2019 including incorporation fee, $1,000; related legal fees of organizing, $5,600; expenses of recruiting and training staff for start-up of new business, $4,100 Patent purchased (10-year life) Direct costs of acquiring a 5-year licensing agreement Goodwill purchased (indefinite life) Legal fee for successful defence of patent (see above) Costs of research department for year Royalties paid under licensing agreement (see above) 1 16.100 78,000 78.000 326,400 12.815 75,000 2.775 1 31 31 The new business started up on July 2, 2019. No amortization was recorded for 2019 or 2020. The goodwill purchased on April 1, 2020, includes in-process development costs that meet the six development stage criteria, valued at $174.000. The company estimates that this amount will help it generate revenues over a 10-year period. (a) Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as at December 31, 2020, and record any necessary amortization so that all balances are appropriate as at that date. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round answers to O decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit Dec 31, 2020 Franchises 48000 Prepaid Rent 28000 Retained Earnings 10700 Retained Earnings 5400 Patents 90815 Licences 80775 Research and Development Expense 75000 Goodwill 326400 Intangible Assets 665090 good (To clear Intangible Assets account) Dec 31, 2020 Amortization Expense 6000 Retained Earnings 3000 9000 Franchises (To correct for amortization on franchises) Dec 31, 2020 Rent Expense 14000 Retained Earnings 3500 Prepaid Rent 17500 (To correct for rent payments) Amortization Expense Dec. 31, 2020 8580 Patents 8580 (To record amortization expense on patents) Dec 31, 2020 Amortization Expense (To record amortization expense on licences) Dec. 31, 2020 Amortization Expense (To record amortization expense on development cost)
