Due to rapid turnover in the accounting department, several transactions involving intangible assets were improperly recorded by Sheridan Co. in the year ended December 31, 2021: 1. Sheridan developed a new manufacturing process early in the year, incurring research and development costs of $198,000. Of this amount, 45% was considered to be development costs that could be capitalized. Sheridan recorded the entire $198,000 in the Patents account and amortized it using a 15-year estimated useful life. 2. On July 1, 2021, Sheridan purchased a small company and, as a result of the purchase, recorded goodwill of $500,000. Sheridan recorded a half-year's amortization on the goodwill in 2021 based on a 40-year useful life and credited the Goodwill account. 3. Several years ago, Sheridan paid $81,000 for a licence to be the exclusive Canadian distributor of a Danish beer. In 2018, Sheridan determined there was an impairment of $44,000 in the value of the licence and recorded the loss. In 2021, because of a change in consumer tastes, the value of the licence increased to $91,000. Sheridan recorded the $54,000 increase in the licence's value by crediting Impairment Loss and debiting the Licence account. Management felt the company should consistently record increases and decreases in value. No. Account Titles and Explanation Debit Credit 1. Research Expense 108900 Patents 108900 (To correct patent error.) Accumulated Amortization - Patents 7260 Amortization Expense 7260 (To correct amortization.) 2. Goodwill 6250 Amortization Expense 6250 3. Impairment Loss 10000 Accumulated Amortization - Licence 10000