Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly

Question:

Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly recorded by Kaya A.S¸. in 2017.

1. Kaya developed a new manufacturing process, incurring research and development costs of 110,000 before reaching technological feasibility. The company also purchased a patent for 70,000. In early January, Kaya capitalized 180,000 as the cost of the patents. Patent amortization expense of 9,000 was recorded based on a 20-year useful life.

2. On July 1, 2017, Kaya purchased a small company and as a result acquired goodwill of 200,000. Kaya recorded a half-year's amortization in 2017, based on a 40-year life ( 2,500 amortization). The goodwill has an indefinite life.

Instructions

Prepare all journal entries necessary to correct any errors made during 2017. Assume the books have not yet been closed for 2017.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented...