Question

These are selected 2017 transactions for Pina Corporation:

Jan. 1 Purchased a copyright for $135,250. The copyright has a useful life of 5 years and a remaining legal life of 34 years.
Mar. 1 Purchased a patent with an estimated useful life of 5 years and a legal life of 20 years for $118,800.
Sept. 1 Purchased a small company and recorded goodwill of $152,800. Its useful life is indefinite.

Prepare all adjusting entries at December 31 to record amortization required by the events.

Answer 1

Answer:

The answer are given below

Explanation:

1.Copyright                     $135,250

Useful life                        5 years

Amortization for the year (135,250/5)  $27,050

Amortization Expense   Dr.$27,050

Accumulated Amortization Cr.$27,050

2. Patent          $118,800

Useful life          5 years

Amortization for the year  (118,800/500) $23,760

Amortization Expense   Dr.$23,760

Accumulated Amortization Cr.$23,760

3. Goodwill     $152,800

  No amortization will be recorded as the intangible has indefinite useful.

In case 1 & 2 above, useful life is considered for working amortization on intangibles as their legal lives are greater than their useful life. Therefore useful life is used for the calculation.