View Policies Current Attempt in Progress Flint 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: INTANGIBLE ASSETS-FLINT July 1, 2019 8-year franchise; expiration date of June 30, 2027 $44,000 Oct. 1 Advance payment on office lease (2-year lease) 29,000 Dec. 31 Net loss for 2019 including incorporation fee, $1,000; related legal fees of organizing, $5,300; expenses of recruiting and training staff for start-up of new business, $4,000 16,500 Feb. 15, 2020 Patent purchased (10-year life) 82,800 Mar. 1 Direct costs of acquiring a 5-year licensing agreement 77,400 Apr. 1 Goodwill purchased (indefinite life) 312,400 June 1 Legal fee for successful defence of patent (see above) 12,815 Dec. 31 Costs of research department for year 75,000 31 Royalties paid under licensing agreement (see above) 2,775 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 $176,000. 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 Ofor the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Credit Dec. 31, 2020 Franchises 44,000 Rent Expense 29,000 Retained Earnings 16,500 Licences 77,400 Patents 82,800 Goodwill 136,400 Office Expense 12,815 Research and Development Expense 75,000 Royalty Expense 2,775 Intangible Assets 476,690 (To clear Intangible Assets account) Dec. 31, 2020 Retained Earnings 5500 Amortization Expense 5500 Accumulated Amortization - Franchises 11000 (To correct for amortization on franchises) Dec. 31, 2020 Retained Earnings 3625 Rent Expense 14500 Prepaid Rent 18125 (To correct for rent payments) Dec. 31, 2020 Amortization Expense Accumulated Amortization - Patents (To record amortization expense on patents) Dec. 31, 2020 Amortization Expense Accumulated Amortization - Licences (To record amortization expense on licences) Dec. 31, 2020 Amortization Expense Accumulated Amortization - Development Costs (To record amortization expense on development cost)
