Ask Question
28 December, 15:46

Jan. 1Purchased a small company and recorded goodwill of $177,000. Its useful life is indefinite. May 1Purchased for $144,000 a patent with an estimated useful life of 6 years and a legal life of 19 years. Prepare necessary adjusting entries at December 31 to record amortization required by the events above.

+3
Answers (1)
  1. 28 December, 16:12
    0
    The Journal entries are as follows:

    (i) On December 31,

    No entry

    (ii) On December 31,

    Amortization expense A/c Dr. $16,000

    To Patents A/c $16,000

    (To record the amortization expenses)

    Workings:

    Amortization expense:

    = (Purchasing cost of patent : Estimated useful life) * Time period

    = ($144,000 : 6) * (8/12)

    = $24,000 * (8/12)

    = $16,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Jan. 1Purchased a small company and recorded goodwill of $177,000. Its useful life is indefinite. May 1Purchased for $144,000 a patent with ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers