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Journal entryBeginnerPublished

Question · Cost of a separately acquired intangible asset

An entity acquires on credit, from a vendor, a licence for inventory management software invoiced at 75,000. It pays 3,000 in cash in fees to a consultant who installs the software and checks that it works properly before it goes live. Record the initial recognition entry.

Licence price (on credit)
75,000
Installation and testing fees (paid in cash)
3,000
Your answer
  1. Line 1

    Account Intangible assets — cost of the licence

  2. Line 2

    Account Payable to the vendor

  3. Line 3

    Account Cash — fees paid

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