Question 4

1. Prepare journal entries for 2016 for the following independent situations. Assume each

organization has a December 31st year end.

Keepers Inc. purchases a patent for $425,000 on January 1st. Keepers estimates this patent to have a 5- year useful life.

Blue Bat Corporation purchases one of their main competitors on March 31. Blue Bat paid $90,000 for this purchase which included assets of $70,000 and liabilities of $2,000. The goodwill is believed to have an indefinite benefit.