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These are selected 2017 transactions for Swifty Corporation: Jan. 1 Purchased a copyright for $122,750. The copyright has a useful life of 5 years and a remaining legal life of 30 years. Mar. 1 Purchased a patent with an estimated useful life of 4 years and a legal life of 26 years for $51,120. Sept. 1 Purchased a small company and recorded goodwill of $154,200. Its useful life is indefinite.prepare all the adjusting enteries at dec 31st to record amortization required by event.

User Jesantana
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Answer:

Dr Amortization expense $24,550

Cr Copyright asset $24,550

Dr Amortization $10,650

Cr Patent asset $10,650

Step-by-step explanation:

It is noteworthy that an intangible such as patents,copyrights ,goodwill and so on whose useful life is infinite is not amortized,hence the goodwill would not be amortized as a result there is adjusting entries in respect of goodwill.

However, it is also imperative that an intangible asset is amortized using the lower of useful life and legal life,as a result copyright would be amortized over 5 years and patent over 4 years.

Copyright yearly amortization=$122,750/5 years=$24,550

Patent's apportioned amortization=$51,120/4 years*10/12=$10,650

The amortization in each case is debited to amortization expense account and credited to individual asset account.

User Sufia
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