Due to rapid turnover in the accounting office of Erb and Associates, a number of transactions involving intangible assets were improperly recorded for the year ended December 31, 2019. Your task is to prepare journal entries to correct any possible errors. a) Erb and Associates developed a new patented manufacturing process in the year. The patents legal fees and fegistration fees totaled $4,600. They incurred research and development of $50,500. Since this cost was entirely attributable to the patent they recorded as part of the patent. They already amortized the patent at the end of the year assuming a useful life of 10 years. [4 Marks] What they recorded when the purchased the patent. Account Title Debit Credit Patent 55,100 Cash 55,100 To record the purchases of patent What they should record to correct the above error. Account Title Debit Credit Patent 4,600 Cash 4,600 What they recorded when the amortized the patent. Account Title Debit Credit Amortization Expense - Patent 5,510 Patent 5,510 To record the amortization of patent What they should record to correct the above error. Account Title Debit Credit Amortization Expense - Patent 5,050 Patent 5,050 b) Erb and Associates purchased a new patent from a competitor at a cost of $45,000. They had the patent appraised at a value of $145,000. They recorded the gain on the patent increasing their revenue and asset during the year. At the end of the year they recorded amortization assuming a 20 year amortization process. [4 Marks] What they recorded when they purchased the patent. Account Title Debit Credit Patent 145,000 Gain on Patent Revenue 100,000 45,000 Cash To record the purchase of a Patent What they should record to correct the above error. Account Title Debit Credit c) During the year Erb and Associates purchased a small company. The purchase ended up in a goodwill being set up for $62,000. There was no impairment this year. Therefore, they decided to amortize the goodwill at the end of the year over a 20 year process. [2 Marks] What they recorded when they amortized the goodwill. Account Title Debit Credit Amortization of Goodwill 3,100 Goodwill 3,100 To record amortization of Goodwill What they should record to correct the above error. Account Title Debit Credit Amortization expense Goodwill d) During the 2019 year Erb and Associates gave $15,000 in cash to a charity. They felt this would improve their image so they recorded this as an increase to their own goodwill. [2 marks] What they recorded when they amortized the goodwill. Account Title Debit Credit Goodwill 15,000 Cash 15,000 To record goodwill created by donating to charity What they recorded when they amortized the goodwill. Account Title Debit Credit Goodwill 15,000 Cash 15,000 To record goodwill created by donating to charity What they should record to correct the above error. Account Title Debit Credit Donation Expense 15,000 Goodwill 15,000 To correct error in goodwill