On December 31, it was estimated that goodwill of $6,000,000 was impaired. In addition, a patent with an estimated useful economic life of 12 years was acquired for $1,500,000 on April 1. A. Journalize the adjusting entry on December 31 for the impaired goodwill. Refer to the Chart of Accounts for exact wording of account titles. B. Journalize the adjusting entry on December 31 for the amortization of the patent rights. Refer to the Chart of Accounts for exact wording of account titles.

loss on impairment X debit

goodwill X credit

patent expense 125,000 credit

patent 125,000 credit

Explanation:

goodwill:

the amount of the impaired is missing. However the entry will loss on impairment debit, because it is an expense

and the goodwill will be credited, because the asset is decreasing

patent:

we will do amortization like it was the depreciation on a car, the diference will be that we on't use a contra-asset account (accumulated deperciation car) we will directly decrease patent account

patent acquisition 1,500,000

economic life 12

purchase / economic life = striaght-line amortization

1,500,000/12 = 125,000