Bittoto Ltd has four different intangible assets at the end of 2016. Facts concerning each are: 1.

Question:

Bittoto Ltd has four different intangible assets at the end of 2016. Facts concerning each are:
1. Franchise. On 2 January 2016, Bittoto Ltd purchased a franchise to distribute a new product for a 10-year period with no right of renewal. Cost of the franchise was $860 000.
2. Copyright. On 3 April 2016, the company purchased a copyright for $150 000. The remaining legal life of the copyright was 12 years, and it is expected to have a useful life of 8 years to Bittoto Ltd with no residual value.
3. Goodwill. Bittoto Ltd began operations on 2 January 2012 by purchasing another company for a total cash payment of $640 000. Included in the purchase price was a payment of $120 000 for goodwill. The managing director of Bittoto Ltd believes that ‘the goodwill is such an important non-current asset of the company that it should last for 100 years’.
4. Patent. Bittoto Ltd purchased a patent on 1 July 2016 from Chai Ltd for $86 000. The patent had been registered initially on 1 January 2012 and is expected to be useful to Bittoto Ltd for another 10 years.

Required

A. Prepare journal entries to record the acquisition of intangible assets during 2016.

B. Prepare journal entries for each intangible asset that are necessary at the end of the annual accounting period on 31 December 2016.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...

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