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Chapter 5: BE5-6 (page 239)

Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2017: Prepaid Rent \(12,000, Goodwill \)50,000, Franchise Fees Receivable \(2,000, Franchises \)47,000, Patents \(33,000, and Trademarks \)10,000. Prepare the intangible assets section of the balance sheet.

Short Answer

Expert verified

Intangible Assets of the business entity total$140,000.

Step by step solution

01

Definition of Franchise Fee

The franchisee makes some payment to get authorization for selling another company’s products. This is known as the franchise fee. Such fee payments allow the franchisee access to the franchisor’s trademark and business process.

02

Intangible Asset Section

Particular

Amount $

Goodwill

$50,000

Franchises

47,000

Patent

33,000

Trademark

10,000

Total Intangible Assets

$140,000

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Most popular questions from this chapter

What is meant by liquidity? Rank the following assets from one to five in order of liquidity.

(a) Goodwill.

(b) Inventory.

(c) Buildings.

(d) Short-term investments.

(e) Accounts receivable.

What is working capital? How does working capital relate to the operating cycle?

What are the major limitations of the balance sheet as a source of information?

Kathleen Battle says, “Retained earnings should be reported as an asset, since it is earnings which are reinvested in the business.” How would you respond to Battle?

What is the relationship between current assets and current liabilities?
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