Janes Company provided the following information on intangible assets:
a. A patent was purchased from the lou Company for $700,000 on January 1, 2007. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $350,000 when Lou sold it to Janes.
b. During 2009, a franchise was purchased from the Rink Company for $500,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase.
c. Janes incurred research and development costs in 2009 as follows:
Materials and supplies 140,000
Personnel 180,000
indirect costs 60,000
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total 380,000
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d. Effective January 1, 2009, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years.
Required:
1. prepare the entries necessary in 2007 and 2009 to reflect the above information.
2. Prepare a schedule showing the intangible asset of Janie's December 31, 2009, balance sheet.
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