P10-8A Due to rapid turnover in the accounting department, a number of transactions involving
intangible assets were improperly recorded by Thorne Company in 2008.
1. Thorne developed a new manufacturing process, incurring research and development costs
of $136,000. The company also purchased a patent for $60,000. In early January, Thorne
capitalized $196,000 as the cost of the patents. Patent amortization expense of $9,800 was
recorded based on a 20-year useful life.
2. On July 1, 2008, Thorne purchased a small company and as a result acquired goodwill of
$92,000. Thorne recorded a half-year’s amortization in 2008, based on a 50-year life ($920
amortization).The goodwill has an indefinite life.
Instructions
Prepare all journal entries necessary to correct any errors made during 2008. Assume the books
have not yet been closed for 2008.
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