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She Shed. Corp has these business events occurred during the past two years, affecting intangible assets....

She Shed. Corp has these business events occurred during the past two years, affecting intangible assets.

1. Purchased a concession license for $20,000 on July 1, 2017. The license gives She Shed exclusive rights to sell its sheds in the tri-state region and will expire on July 1, 2025.

2. Purchased a patent on January 2, 2018, for $40,000 with an estimated five-year useful life.

3. Costs incurred to develop an exclusive Internet connection process as of June 1, 2018, were $45,000. The process has an indefinite life.

4. On April 1, 2018, She Shed purchased a small circuit board manufacturer for $350,000. Goodwill recorded in the transaction was $90,000.

5. On July 1, 2018, legal fees for successful defense of the patent purchased on January 2, 2018, were $11,400.This did not extend the original life of the patent.

6. Research and development costs for employee wages were $75,000 as of December 1, 2018.

7. Due to pending lawsuits, the patent’s useful life declines to three years.

8. At December 31, 2018, an impairment test on the license purchased in 2017 reveals (a) the estimated net cash flows from the license will be $13,000, and (b) the fair value of the license is $7,000.

9. The small circuit board manufacturer is expecting free cash flows in excess of $500,000 over the next three years

(a) Prepare the journal entries to record all these events.

(b) Show the proper presentation of intangible assets on the balance sheet at December 31, 2017 and December 31, 2018.

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ekkarill92 answered 7 months ago
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