On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $5.7 million, patent; $4.7 million, developed technology; $3.7 million, in-process research and development; $6.7 million, goodwill. Lexicon’s policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life.

What is the total amount of expenses (ignoring taxes) that would appear in Lexicon’s income statement for the year ended December 31 related to these items? (Enter your answers in whole dollars.)

	Cost	Select	Amortization expense in current (partial) year
Patent	$5,700,000	?	?
Developed technology	4,700,000	?	?
In-process research and development	3,700,000	?	?
Goodwill	6,700,000	?	?
Total amortization expense - current year			?

7. On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $56,625. The expenditures made to acquire the asset were as follows:

Purchase price	$	242,000
Freight charges		8,400
Installation charges		12,000

Jackson’s policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment’s life and then switch to straight line halfway through the equipment’s life.

Required:

1. Calculate depreciation for each year of the asset’s eight-year life.

	Depreciation for the Period				End of Period
Year	Beginning of Period Book Value	Depreciation Rate		Annual Depreciation	Accumulated Depreciation	Book Value
2018	?	?	%	?	?	?
2019	?	?	%	?	?	?
2020	?	?	%	?
2021	?	?	%	?
2022	?			?
2023				?
2024				?
2025				?
Total

8. In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $369,000 cost of equipment purchased on January 1, 2015. The equipment’s life was expected to be five years with no residual value. Straight-line depreciation is used by PKE.

Required:
1. Prepare the correcting entry assuming the error was discovered in 2018 before the adjusting and closing entries. (Ignore income taxes.)
2. Assume the error was discovered in 2020 after the 2019 financial statements are issued. Prepare the correcting entry.

Prepare the correcting entry assuming the error was discovered in 2018 before the adjusting and closing entries. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer rating: 100% (QA)

6 Cost Select Amortization expense in the current partial year Patent 5700000 5 Years 612 5700000 Amortized 570000 Developed technology 4700000 5 Year... View the full answer