Question

The following information relates to the intangible assets of Lettuce Express:
a. On January 1, 2015, Lettuce Express completed the purchase of Farmers Produce, Inc., for $ 1,600,000 in cash. The fair value of the identifiable net assets of Farmers Produce was $ 1,440,000.
b. Included in the assets purchased from Farmers Produce was a patent for a method of processing lettuce valued at $ 49,500. The original legal life of the patent was 20 years. There are still 17 years left on the patent, but Lettuce Express estimates the patent will be useful for only 9 more years.
c. Lettuce Express acquired a franchise on July 1, 2015, by paying an initial franchise fee of $ 216,000. The contractual life of the franchise is eight years.

Required:
1. Record amortization expense for the intangible assets at December 31, 2015.
2. Prepare the intangible asset section of the December 31, 2015, balance sheet.



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  • CreatedJuly 15, 2014
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