Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly recorded by Wasp Company in 2010.
1. Wasp developed a new manufacturing process, incurring research and development costs of $110,000.The company also purchased a patent for $50,000. In early January, Wasp capitalized $160,000 as the cost of the patents. Patent amortization expense of $8,000 was recorded based on a 20 year useful life.
2. On July 1, 2010, Wasp purchased a small company and as a result acquired goodwill of $200,000.Wasp recorded a half year’s amortization in 2010, based on a 50 year life ($2,000 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.