* An intangible asset representing the right to use a patent.

The following information relates to accounts that may yet require adjustment:

1.	Patents for Sorensons manufacturing process were purchased January 2, 2012, at a cost of $68,000. An additional $17,000 was spent in December 2012 to improve machinery covered by the patents and charged to the Patents account. The patents had a remaining legal term of 17 years.
2.	On January 3, 2011, Sorenson purchased two licensing agreements; at that time they were believed to have unlimited useful lives. The balance in the Licensing Agreement No. 1 account included its purchase price of $48,000 and $2,000 in acquisition expenses. Licensing Agreement No. 2 also was purchased on January 3, 2011, for $50,000, but it has been reduced by a credit of $1,000 for the advance collection of revenue from the agreement.
3.	In December 2011, an explosion caused a permanent 60 percent reduction in the expected revenue-producing value of Licensing Agreement No. 1 and, in January 2013, a flood caused additional damage, which rendered the agreement worthless.
4.	A study of Licensing Agreement No. 2 made by Sorenson in January 2012, revealed that its estimated remaining life expectancy was only 10 years as of January 1, 2012.
5.	The balance in the Goodwill account includes $24,000 paid December 30, 2011, for an advertising program, which it is estimated will assist in increasing Sorensons sales over a period of four years following the disbursement.
6.	The Leasehold Improvement account includes (a) the $15,000 cost of improvements with a total estimated useful life of 12 years, which Sorenson, as tenant, made to leased premises in January 2011; (b) movable assembly-line equipment costing $8,500, which was installed in the leased premises in December 2012; and (c) real estate taxes of $2,500 paid by Sorenson, which, under the terms of the lease, should have been paid by the landlord. Sorenson paid its rent in full during 2012. A 10-year nonrenewable lease was signed January 3, 2011, for the leased building that Sorenson used in manufacturing operations.
7.	The balance in the Organization Expenses account includes preoperating costs incurred during the organizational period.

SI General Journal Debit Credit 17000 Machin Patents 17000 To transfer cost of improving machinery to the fixed asset account Cost of goods sold To record straight-line amortization of patents for the year Licensing agreement no. 2 To record unearned revenue in a deferred credit account Patents 2. Revenue received in advance Retained earnings Li icensing agreement no.1 To record the 60% loss caused by the explosion in the prior year. Correction of an accounting error of the off of damage due to flood prior year. Write- 4 Cost of sold Licensing agreement no. 2 To record amortization for the year on straight-line basis, 10- year life Retained earnings Goodwill To correct the accounting error of last year of improperly capitalizing an expense item icensing agreement no. 2 Patents Li Leasehold improvements To record equipment in the proper account and to record a receivable for the real estate taxes Organizational expenses Amortization expense-current year Leasehold improvements To record current amortization and correct the error of failure to record amortization of leasehold improvements on a straight line, 10-year basis. No adjustment to depreciation of equipment because it was acquired in December Retained earnings nizational expenses To write off organizational expenses improperly capitalized in prior period