Prepare an entry as of december

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Reference no: EM133165045

Question - 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.

Reference no: EM133165045

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