Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets and goodwill were recorded in a questionable way by the Stiles Corporation's accountant, Jim Lowenstein, in the year ended December 31, 2012:

1. Stiles developed a new manufacturing process in the first quarter of the year, incurring costs of $320,000. Of this amount, 45% was considered to be development costs that could be capitalized while the rest were considered research costs. The development phase ended on March 31. Jim recorded the entire $320,000 in the Equipment account and depreciated it over a 15-year useful life starting on January 1, 2012.

2. On July 1, 2012, Stiles purchased a small company and Jim recorded goodwill of $800,000 as part of the transaction. This was calculated by taking the purchase price of $4 million less the net carrying amount of the purchased company's assets and liabilities, which was $3.2 million, despite the fact that the fair value of some equipment with a 5-year life was $100,000 higher than their carrying amount. Jim recorded a half-year's amortization for the goodwill in 2012, based on an estimated 40-year life.

3. On March 1, 2012, the company purchased a trademark for $95,000. Shortly thereafter, it was sued for trademark infringement. At the end of the year, Jim determined that the recoverable amount of the trademark was $35,000. He did not record an impairment loss, because he is hopeful that the recoverable amount will rebound next year after the conclusion of the legal case defending the company's right to use this trademark.

4. The company made a $12,000 charitable donation on December 31, 2012, which was recorded with a debit to goodwill.

Instructions

Prepare the necessary journal entries to correct any errors made in recording the above transactions.