Question

These are selected 2017 transactions for Flounder Corporation: Jan. 1 Purchased a copyright for $110, 750. The copyright has a useful life of 5 years and a remaining legal life of 33 years. Mar. 1 Purchased a patent with an estimated useful life of 6 years and a legal life of 20 years for $138, 600. Sept. 1 Purchased a small company and recorded goodwill of $153, 350. Its useful life is indefinite.

Prepare all adjusting entries at December 31 to record amortization required by the events. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer and Explanation:

The adjusting journal entries are as follows:

On Dec 31

Amortization expense $22,150 ($110,750 ÷ 5 years)

To Copyrights $22,150

(Being amortization expense is recorded)

Here amortization expense is debited as it increased the expenses and credited the copyrights as it decreased the assets

On Dec 31

Amortization expense $19,250 ($38,600 ÷ 6 years × 10 ÷ 12)

To Patents $19,250

(Being amortization expense is recorded)

Here amortization expense is debited as it increased the expenses and credited the patents as it decreased the assets

On Dec 31

No journal entry is required