Question 10.8: Impaired Goodwill and Amortization of Patent On December 31,......
Impaired Goodwill and Amortization of Patent
On December 31, it was estimated that goodwill of $40,000 was impaired. In addition, a patent with an estimated useful economic life of 12 years was acquired for $84,000 on July 1.
a. Journalize the adjusting entry on December 31 for the impaired goodwill.
b. Journalize the adjusting entry on December 31 for the amortization of the patent rights.
a. Dec. 31 Loss from Impaired Goodwill . . . . . . . . . . . . . . 40,000
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Impaired goodwill.
b. Dec. 31 Amortization Expense—Patents . . . . . . . . . . . 3,500
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500
Amortized patent rights [($84,000/12) × (6/12)].