Question: Intangibles

Prepare the Intangible section of the balance sheet for ABC Company as of Dec 31, 2018. Use correct format. Also, calculate the amount of expense that will appear on the income statement related to these transactions.

The following transactions occurred on Jan 1, 2018 (assume that there are no other intangibles in the company):

(a) Purchased Goodwill for $30,000 which will last for 10 years.

(b) Paid research and development costs of $20,000. The research is expected to result in a new product in the next 2 years.

(c) Purchased franchise rights for $25,000. The franchise period is 5 years. During the year, the company paid $15,000 in royalty fees to the parent company.

(d) The company paid legal fees of $6,000 to defend their patent. The remaining life of the patent is 3 years.

(e) The company purchased a copyright for $12,000 with an indefinite life.