Collins Ltd. has these transactions related to and in 2012, its first year of operations:
Jan. 2 Purchased a patent with an estimated useful life of five years and a legal life of 20 years for $40,000.
Apr. 1 Acquired another company and recorded of $300,000 as part of the purchase.
July 1 Acquired a franchise for $250,000. The franchise agreement expires on July 1, 2019.
Sept. 1 Incurred research costs of $150,000.
30 Incurred development costs of $50,000. No marketable product has been identified as yet.
Dec. 31 Recorded annual amortization.
31 Tested the for impairment. Recoverable amounts exceeded carrying amounts in all cases. Also tested and determined that it had a recoverable amount of $270,000.
Instructions
(a) Prepare the entries to record the above transactions. Assume all costs incurred were for cash.
(b) Show the presentation of the and good will on the statement of financial position at December 31, 2012.
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