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 the Thorne Company in 2008.
1. Thorne developed a new manufacturing process, incurring research and development costs of
\($136,000.\) The company also purchased a patent for \($60,000.\) In early January, Thorne capitalized \($196,000\) as the cost of the patents. Patent amortization expense of \($9,800\) was recorded based on a 20-year useful life.
2. On July 1, 2008, Thorne purchased a small company and as a result acquired goodwill of \($92,000.\) Thorne recorded a half-year’s amortization in 2008, based on a 50-year life (\($920\) amortization). The goodwill has an indefinite life.
Instructions
Prepare all journal entries necessary to correct any errors made during 2008. Assume the books have not yet been closed for 2008.
Step by Step Answer:
Accounting Principles
ISBN: 9780471980193
8th Edition
Authors: Jerry J Weygandt, Donald E Kieso, Paul D Kimmel