Bright Designs Limited began operations in 20X5 and, at the end of its first year of operations, reported a balance of $ 1,203,000 in an account called €œ intangibles.€ Upon further investigation, it is discovered that the account had been debited throughout the year as follows:

Required:
1. Prepare a correcting entry that reallocates all amounts charged to intangibles to the appropriate accounts. State any assumptions made.
2. Calculate amortization expense on intangible assets for 20X5. Straight- line amortization, to the exact month of purchase, is used. All residual values are expected to bezero.

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5 Jan Organization costs; legal fees. Economic life is indefinite. 20,000 1 Feb. Patent registration; legal fees re: patent with 20-year life to be used in research activities. Operating expenses, first six months. Goodwill; excess of purchase price of an advertising company paid over tangible assets acquired. Copyright acquired; remaining legal life is 29 years but economic life is 10 years. 10,000 1 July 1 Aug. 440,000 320,000 42,000 10 Nov. 30 Nov. Trademark registration; legal fees. The trademark is expected to have an indefinite economic life. 16,000 5 Dec Staff training costs; staff is expected to stay with the company for an average of three years; however, there are no employment contracts. Research costs incurred over the year; 40% of all research costs are properly classified as internally generated intangibles. The product developed will begin commercial production next year. 55,000 31 Dec. 300,000 $1,203,000