Question

Impaired Goodwill and Amortization of Patent On April 1, a patent with an estimated useful economic life of 12 years was acquired for $1,500,000. In addition, on December 31, it was estimated that goodwill of $6,000,000 was Impaired. a. Record the acquisition of patent. If an amount box does not require an entry, leave it blank. April 1 b. Journalize the adjusting entry on December 31 for the amortization of the patent rights. If an amount box does not require an entry, leave it blank. Dec. 31 c. Journalize the adjusting entry on December 31 for the impaired goodwill. If an amount box does not require an entry, leave it blank. Dec 31

Answer 1

Journal

a) April 1	Patent	1,500,000
	Cash		1,500,000
b) Dec. 31	Amortization expense - Patent	93,750
	Accumulated amortization - Patent		93,750
c) Dec. 31	Impairment loss	6,000,000
	Goodwill		6,000,000

Amortization expense - Patent on December 31 = Cost of patent/Useful life x 9/12

= 1,500,000/12 x 9/12

= $93,750

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