Question: Due to rapid employee turnover in the accounting department the following

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.

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  • CreatedApril 21, 2012
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