Reichenbach Co$.,$ organized in $2019,$ has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during $2020$ and $2021.$

Intangible Assets

$7/1/208-$year franchise; expiration date $6/30/25$ $$48,000$

$10/1/20$ Advance payment on laboratory space $(2-$year lease$)24,000$

$12/31/20$ Net loss for $2020,$ including state incorporation fee, $$1,000,$ and related legal fees of organizing, $$5,000($all fees incurred in $2020)16,000$

$1/2/21$ Patent purchased $(10-$year life$)84,000$

$3/1/21$ Cost of developing a secret formula $($indefinite life$)75,000$

$4/1/21$ Goodwill purchased $($indefinite life$)278,400$

$6/1/21$ Legal fee for successful defense of patent purchased above $12,650$

$9/1/21$ Research and development costs $160,000$

Other assets accounts:

Cash & Cash Equivalent $ $34\mathrm{.}396$

Accounts Receivable $($net$)84,300$

Inventory $159,000$

Property, Plant, and Equipment $($net$)359,625$

Depreciable asset's useful life ranges between $3$ and $10$ years, and the straight$-$line method is used for the computation of depreciation expense.

Instructions

$1.$ Explain the situation in the Accounting Information System account for Intangible Assets and implications.

$2.$ Prepare the necessary entries to clear the Intangible Assets account and set up separate accounts for distinct intangibles. Make the entries and any correcting entries as of December $31,2021.$

$3.$ Record any necessary amortization and accurately reflect all balances as of that date. $($Ignore income tax effects.$)$

$4.$ Prepare the Assets section of the Balance Sheet as of December $31,2021.$

$5.$ Prepare the Note $1-$ Significant Accounting Policies