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 years amortization in 2010 based on a 40 year life ($500 amortization). The goodwill has an indefinite life.
Instructions
Prepare all journal entries necessary to correct any errors made during 2010. Assume the books have not yet been closed for 2010.