Nelson Company, Organized in 2014, Has These Transactions Related to Intangible

question 95

Essay

Nelson Company, organized in 2014, has these transactions related to intangible assets in that year:
Jan. 2 Purchased a patent (5-year life) $325,000.
Apr. 1 Goodwill purchased (indefinite life) $360,000.
July 1 Acquired a 9-year franchise; expiration date July 1, 2023, $720,000.
Sept. 1 Research and development costs $185,000.
Instructions
(a) Prepare the necessary entries to record these intangibles. All costs incurred were for cash.
(b) Make the entries as of December 31, 2014, recording any necessary amortization.
(c) Indicate what the balance should be on December 31, 2014.

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Definitions:

Yield To Maturity

The total expected return on a bond if held until its maturity date, taking into account both the interest payments and any gain or loss if the bond was purchased at a discount or premium.

Newspaper

A printed publication consisting of news articles, editorials, and advertisements, typically published daily or weekly.

Real Rate Of Return

A yearly rate of return on an investment, corrected for inflationary changes or other external conditions affecting the price level.

Nominal Rate

The stated interest rate on a loan or investment, not adjusting for inflation or compounding effect.