PE 10-8A Impaired goodwill and amortization of patent

On December 31, it was estimated that goodwill of $750,000 was impaired. In addition, a patent with an estimated useful economic life of 18 years was acquired for $864,000 on August 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.

Answer:
a.  Dec. 31 Loss from Impaired Goodwill...................... 750,000    
                                   Goodwill ..................................................  750,000    
                                                   Impaired goodwill.

b. Dec. 31 Amortization Expense—Patents................. 20,000    
                                        Patents.....................................................  20,000    
                                                    Amortized patent rights      
                                                     [($864,000/18) × 5/12].

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