Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by Neitzke Corporation in 2012.
1. Neitzke developed a new manufacturing process, incurring research and development costs of $160,000. The company also purchased a patent for $40,000. In early January, Neitzke capitalized $200,000 as the cost of the patents. Patent amortization expense of $10,000 was recorded based on a 20-year useful life.
2. On July 1, 2012, Neitzke purchased a small company and as a result acquired goodwill of $80,000. Neitzke recorded a half-year’s amortization in 2012, based on a 20-year life ($2,000 amortization). The goodwill has an indefinite life.
Instructions
Prepare all journal entries necessary to correct any errors made during 2012. Assume the books have not yet been closed for 2012.