On December 31, it was estimated that goodwill of $6,000,000 wasimpaired. In addition, a patent with an estimated useful economiclife of 12 years was acquired for $1,500,000 on April 1. Journalizethe adjusting entry on December 31 for the impaired goodwill. Whatis goodwill? What does it mean for goodwill to be impaired?Journalize the adjusting entry on December 31 for the amortizationof the patent rights. Why are patents and other intangible assetsamortized?
On December 31, it was estimated that goodwill of $6,000,000 wasimpaired. In addition, a patent with an estimated useful economiclife of 12 years was acquired for $1,500,000 on April 1. Journalizethe adjusting entry on December 31 for the impaired goodwill. Whatis goodwill? What does it mean for goodwill to be impaired?Journalize the adjusting entry on December 31 for the amortizationof the patent rights. Why are patents and other intangible assetsamortized?
Related questions
PA9-4 Recording Transactions and Adjustments for Tangible and Intangible Assets [LO 9-1, LO 9-2, LO 9-3, LO 9-4, LO 9-5, LO 9-6]
| The following transactions and adjusting entries were completed by a paper-packaging company called Gravure Graphics International during 2015 and 2016. The company uses straight-line depreciation for trucks and other vehicles, double-declining-balance depreciation for buildings, and straight-line amortization for patents. |
| January | 2 | , 2015 | Paid $88,000 cash to purchase storage shed components. |
| January | 3 | , 2015 | Paid $4,000 cash to have the storage shed erected. The storage shed has an estimated life of 10 years and a residual value of $7,000. |
| April | 1 | , 2015 | Paid $31,000 cash to purchase a pickup truck for use in the business. The truck has an estimated useful life of five years and a residual value of $5,000. |
| May | 13 | , 2015 | Paid $300 cash for repairs to the pickup truck. |
| July | 1 | , 2015 | Paid $27,000 cash to purchase patent rights on a new paper bag manufacturing process. The patent is estimated to have a remaining useful life of five years. |
| December | 31 | , 2015 | Recorded depreciation and amortization on the pickup truck, storage shed, and patent. |
| June | 30 | , 2016 | Sold the pickup truck for $26,000 cash. (Record the depreciation on the truck prior to recording its disposal.) |
| December | 31 | , 2016 | Recorded depreciation on the storage shed. Determined that the patent was impaired and wrote off its remaining book value (i.e., wrote down the book value to zero). |
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| Prepare the journal entries required on each of the above dates.
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