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Melissa Company, which was organized in January 2020, recorded the following transactions during the year in a single account called Intangible Assets: Intangible Assets 2020
Melissa Company, which was organized in January 2020, recorded the following transactions during the year in a single account called Intangible Assets:
Intangible Assets | ||
2020 | ||
January 2 | State incorporation fees | $10,000 |
January 2 | Legal fee to incorporate | 20,000 |
January 3 | Underwriter fees for handling stock issue | 45,000 |
March 1 | Patent acquired from Laura Company | 240,000 |
June 1 | Employee training costs-see note | 20,000 |
December 1 | Legal costs incurred to defend patent acquired on Mar. 1 | |
(Melissa Co. won the lawsuit) | 110,000 | |
December 1 | Discount on bonds payable | 450,000 |
January December | R&D costs incurred for new product development | 180,000 |
December 31 | Catering costs for board of directors' meeting | 12,000 |
December 31 | Ending balance | $1,087,000 |
Note: The president of Melissa has stated that she believes the employee training costs have resulted in goodwill.
Required:
a. | Prepare an entry as of December 31, 2020, to reclassify the items from the intangible assets account to the appropriate accounts. |
b. | Prepare the adjusting entry or entries required to amortize any intangible assets recorded or remaining from requirement a. Patents are estimated to have a ten-year economic life. Any other intangible assets recognized should be amortized over their legal life. Record amortization to the nearest month, using the straight-line method. Round your final answer to the nearest whole dollar. |
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