Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by Garcia Corporation in 2010.
1. Garcia developed a new manufacturing process, incurring research and development costs of $150,000. The company also purchased a patent for $40,000. In early January Garcia capitalized $190,000 as the cost of the patents. Patent amortization expense of $9,500 was recorded based on a 20-year useful life.
2. On July 1, 2010, Garcia purchased a small company and as a result acquired goodwill of $80,000. Garcia recorded a half-year’s amortization in 2010, based on a 40-year life ($1,000 amortization). The goodwill has an indefinite life.

Prepare all journal entries necessary to correct any errors made during 2010. Assume the books have not yet been closed for 2010.

  • CreatedApril 21, 2012
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