Exercise 12-3

Joni Teal Mountain Inc. has the following amounts reported in its general ledger at the end of the current year.

Organization costs		$22,900
Trademarks		13,900
Discount on bonds payable		35,900
Deposits with advertising agency for ads to promote goodwill of company		10,900
Excess of cost over fair value of net identifiable assets of acquired subsidiary		75,900
Cost of equipment acquired for research and development projects; the
equipment has an alternative future use		85,900
Costs of developing a secret formula for a product that is expected to
be marketed for at least 20 years		80,800

(a) On the basis of this information, compute the total amount to be reported by Teal Mountain for intangible assets on its balance sheet at year-end.

Total amount reported for intangible assets

$

Exercise 12-5

As the recently appointed auditor for Blue Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2017, are prepared. The controller for Blue Corporation mentions that only one account is kept for intangible assets. The account is shown below.

Intangible Assets
				Debit		Credit		Balance
Jan. 4		Research and development costs		931,000				931,000
Jan. 5		Legal costs to obtain patent		72,240				1,003,240
Jan. 31		Payment of 7 months rent on property
		leased by Bryan		84,700				1,087,940
Feb. 11		Premium on common stock				231,000		856,940
March 31		Unamortized bond discount on bonds
		due March 31, 2037		86,400				943,340
April 30		Promotional expenses related to
		start-up of business		208,300				1,151,640
June 30		Operating losses for first 6 months		259,000				1,410,640

Prepare the entries necessary to correct this account. Assume that the patent has a useful life of 10 years. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
(To correct the account)
(To record amortiztion expense)