Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly recorded by the Thorne Company in 2011.
1. Thorne developed a new manufacturing process, incurring research and development costs of $136,000.The company also purchased a patent for $60,000. In early January,Thorne capitalized $196,000 as the cost of the patents. Patent amortization expense of $9,800 was recorded based on a 20 year useful life.
2. On July 1, 2011, Thorne purchased a small company and as a result acquired goodwill of $92,000. Thorne recorded a half year’s amortization in 2011, based on a 50 year life ($920 amortization).The goodwill has an indefinite life.
Instructions
Prepare all journal entries necessary to correct any errors made during 2011. Assume the books have not yet been closed for 2011.