Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by the Hamlin Company in 2010.
1. Hamlin developed a new manufacturing process, incurring research and development costs of $120,000. The company also purchased a patent for $96,000. In early January Hamlin capitalized $216,000 as the cost of the patents. Patent amortization expense of $18,000 was recorded based on a 12-year useful life.
2. On July 1, 2010, Hamlin purchased a small company and as a result acquired goodwill of $40,000. Hamlin recorded a half-year’s amortization in 2010 based on a 40-year life ($500 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.