Question $3$:

On July $1,$ Year $1,$ Aidan Corporation purchased Johnson Company by paying $$187,500$ cash and

issuing a $$65,000$ note payable to Steve Johnson. At July $1,$ Year $1,$ the balance sheet of Johnson

Company was as follows:

The recorded amounts all approximate current values except for land $($worth $$45,000),$ inventory

$($worth $$93,750),$ and copyrights $($worth $$11,250).$

Instructions

$($a$)$ Prepare the July $1$ entry for Aidan Corporation to record the purchase.

$($b$)$ Prepare the December $31$ entry for Aidan Corporation to record amortization of intangibles.

The copyrights have an estimated useful life of $4$ years with a residual value of $$2,450.$