1/1/2025 Amortization Computation: 1/1/2028
Patent 255,000 =255,000 / 20 years Patent 510,000
Cash 255,000 = 12,750 Cash 510,000
12/31/2025 1/1/2027 Amortization Computation:
Amortization Exp. 12,750 Expenses 90,000 1. get the CA of original patent
Accum. Amortization 12,750 Cash 90,000 Cost 255,000
Less: Accumulated Amortization 38,250 (12,750*3)
12/31/2026 12/31/2027 Carrying Amount as of 1/1/2028 216,750
Amortization Exp. 12,750 Amortization Exp. 12,750 Add: Additional Patent 510,000
Accum. Amortization 12,750 Accum. Amortization 12,750 Total CA of patent 726,750
Div. remaining years 17 years
42,750
12/31/2028
Amortization Exp. 42,750
Accum. Amortization 42,750
Acquisition Cost 100,000 Trade mark 115,000
Employee Benefits DIRECTLY 10,000 Cash 115,000
Professional Fees DIRECTLY 5,000
Trademark 115,000 Expenses 3,000
cash 3,000
Trademark 67,000
50,000.00 Cash 67,000
10,000.00
5,000.00 Expenses 30,000
2,000.00 Cash 30,000
Trademark 67,000.00
Amortization (Prorate) Journal Entries
1/1/2025 12/31/2026
2025 50,000.00 (50k/95k) * 285k 150,000.00 copyright 285,000 Amortization Expense 150,000
2026 30,000.00 (30k/95k) * 285k 90,000.00 Cash 285,000 Accum. Amortization 150,000
2027 10,000.00 (10k/95k) * 285k 30,000.00
2028 5,000.00 (5k/95k) * 285k 15,000.00 12/31/2025
95,000.00 285,000.00 Amortization Expense 150,000
Accum. Amortization 150,000
1. Franchise 6,000,000
Cash 6,000,000 Sales 25m
Periodic fee % 5%
2. Cash 25,000,000, 1,250,000.00
Sales 25,000,000
3. Operating Exp. 1,250,000
Cash 1,250,000
Franchise 20,000,000, Annual Payment 31-Dec
Cash 5,000,000 Notes payable 15,000,000 Notes Payable 3,750,000
Notes Payable 15,000,000 Div. years to pay 4 years Interest Expense1,500,000 (15M x 10%)
Annual Payment 3,750,000.00 Cash 5,250,000
PV of Ordinary Annuity 3.79 use this since uniform annual payments
1/1/2028
PV of N/P 1,000,000 x 3.79 = 3,790,000 Franchise 6,790,000
Cash 3,000,000 Discount 1,210,000
Franchise 6,790,000 Cash 3,000,000
N/P 5,000,000
Notes Payable 5,000,000
PV of N/P 3,790,000 12/31/2028
Discounton N/P 1,210,000 Amortization Expense 679,000
Accum. Amortization 679,000
Amortization
Franchise 6,790,000 N/P 1,000,000
Useful Life 10 years Interest Exp. 379,000 (3,790,000 * 10%)
Annual Amortization 679,000.00 Cash 1,000,000
Discount 379,000
FV of Identifiable Asset 5,300,000 Cash 50,000
Less: Liabilities 2,000,000 AR 500,000
FV of Net Identifiable Asset 3,300,000 Invtry 1,500,000
Patent 250,000
Purchase Price 6,000,000 PPE 3,000,000
FVNIA 3,300,000 GOODWILL 2,700,000
Goodwill 2,700,000 Cash 6,000,000
AP 2,000,000
Average 1. 250,000 / 10% = 2,500,000 (FVNIA + Goodwill)
Net Income Less: FVNIA exclusive of Goodwill 1,700,000
2025 200,000.00 GOODWILL 800,000
2026 230,000.00
2027 300,000.00 [Link] Return = 1,700,000 X 8% = 136,000
2028 250,000.00 Average Earning 250,000
2029 270,000.00 Excess Earnings 114,000 / 15%
1,250,000.00 / 5 years GOODWILL 760,000.00
Average earnings 250,000.00
4. Normal Return = 1,700,000 X 10% = 170,000
[Link] Return = 1,700,000 X 10% = 170,000 Average Earning 250,000
Average Earning 250,000 Excess Earnings 80,000 x5.65
Excess Earnings 80,000 x 5 years GOODWILL 452,000.00
GOODWILL 400,000.00
PPE
R&D
WEBSITE
OPEX
PPE 500,000
R& D 100,000
OPEX 50,000
WEBSITE 300,000
CASH 950,000
WEBSITE
ADVERTISING EXPENSE
INVENTORY
OPEX
WEBSITE 50,000
ADVERTISING EXP 10,000
INVENTORY 30,000
OPEX 10,000
CASH 100,000
1/1/2025
CUSTOMER LIST 45,000
CASH 45,000
AMORTIZATION 12/31/2025
45,000 / 3 YEARS AMORTIZATION EXP 15,000
15,000 ACCUMULATED AMORT. 15,000
1. TRADEMARK
CARRYING AMOUNT 2,000,000 IMPAIRMENT LOSS 500,000
LESS: RECOVERABLE 1,500,000.00 (120,000 / 8%) ACCUM. IMPAIRMENT 500,000
IMPAIRMENT LOSS 500,000
2. PATENT
COST 6,000,000 12/31/2025
DIVIDE 5 YEARS AMORTIZATION EXP 1,200,000
AMORTIZATION 1,200,000 ACCUM. AMORTIZATION 1,200,000
COST 6,000,000 IMPAIRMENT LOSS 1,490,000
LESS: ACCUM. AMORT 1,200,000 ACCUM. IMPAIRMENT 1,490,000
CARRYING AMOUNT 4,800,000
LESS: RECOVERABLE 3,310,000.00 (1,000,000 * 3.31)
IMPAIRMENT LOSS 1,490,000.00