Jan. 1 Purchased a copyright for $108,000. The copyright has a useful life of 6 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 20 years for $49,200. Sept. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite. Prepare all adjusting entries at December 31 to record amortization required by the events. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 Amortization Expense 18000 Copyrights 18000 (To record copyrights amortization) Dec. 31 Amortization Expense Patents (To record patent amortization) Dec. 31 Amortization Expense Goodwill (To record goodwill amortization)
Jan. 1 Purchased a copyright for $108,000. The copyright has a useful life of 6 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 20 years for $49,200. Sept. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite. Prepare all adjusting entries at December 31 to record amortization required by the events. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 Amortization Expense 18000 Copyrights 18000 (To record copyrights amortization) Dec. 31 Amortization Expense Patents (To record patent amortization) Dec. 31 Amortization Expense Goodwill (To record goodwill amortization)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
What would the correct entries for this be
Transcribed Image Text:### Educational Content on Accounting Entries for Amortization
**Asset Purchases:**
- **January 1:** Purchased a copyright for $108,000. The copyright has a useful life of 6 years and a remaining legal life of 30 years.
- **March 1:** Purchased a patent with an estimated useful life of 4 years and a legal life of 20 years for $49,200.
- **September 1:** Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite.
**Instructions for Adjusting Entries:**
Prepare all adjusting entries at December 31 to record amortization required by these events. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.
**Amortization Journal Entries:**
1. **December 31:**
- **Account Titles and Explanation:**
- **Debit:** Amortization Expense $18,000
- **Credit:** Copyrights $18,000
(To record copyrights amortization)
2. **December 31:**
- **Account Titles and Explanation:**
- **Debit:** Amortization Expense
- **Credit:** Patents $0
(To record patent amortization)
3. **December 31:**
- **Account Titles and Explanation:**
- **Debit:** Amortization Expense
- **Credit:** Goodwill $0
(To record goodwill amortization)
**Note:**
- Amortization is a method of allocating the cost of an intangible asset over its useful life.
- Goodwill typically is not amortized unless it is impaired.
- Ensure accuracy in alignment of account titles and clarity in explanations for proper financial reporting.
This page details the journal entries for amortization of intangible assets acquired during the year. Proper accounting requires periodic adjustments to reflect asset usage over time, essential for aligning financial records with actual value on the balance sheet.
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