on april 1, a patent with an estimated useful economic life of 14 years was acquired for $439,787. in addition, on december 31, it was estimated that goodwill of $3,918,800 was impaired. a. record the acquisition of patent. refer to the chart of accounts for exact wording of account titles. b. journalize the adjusting entry on december 31 for the amortization of the patent rights. refer to the chart of accounts for exact wording of account titles. c. journalize the adjusting entry on december 31 for the impaired goodwill. refer to the chart of accounts for exact wording of account titles.

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anthougo anthougo · Answer 1 · 2022-11-08T09:16:37-05:00

Journalizing the acquisition and adjusting entries for amortization of the patent and impairment of goodwill is as follows:

April 1 Debit Patent $439,787

Credit Cash $439,787

December 31 Debit Amortization Expense $23,560

Credit Accumulated Amortization - Patent $23,560

December 31 Debit Impairment Loss $3,918,800

Credit Goodwill $3,918,800

Amortization refers to the gradual reduction of the value of an asset or a debt via expensing or repayments.

Goodwill impairment exists when the carrying (book) value is more than the fair (market) value.

April 1: Acquisition of patent = $439,787

Estimated economic life = 14 years

Annual Amortization = $31,413

December 31, First Year:

Amortization = $23,560 ($31,413 x 9/12)

April 1 Patent $439,787 Cash $439,787

December 31 Amortization Expense $23,560 Accumulated Amortization - Patent $23,560

December 31 Impairment Loss $3,918,800 Goodwill $3,918,800

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