These are selected 2017 transactions for Pina Corporation: Jan. 1 Purchased a co

Question

These are selected 2017 transactions for Pina Corporation: Jan. 1 Purchased a copyright for $135,250. The copyright has a useful life of 5 years and a remaining legal life of 34 years. Mar. 1 Purchased a patent with an estimated useful life of 5 years and a legal life of 20 years for $118,800. Sept. 1 Purchased a small company and recorded goodwill of $152,800. Its useful life is indefinite. Prepare all adjusting entries at December 31 to record amortization required by the events. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 (To record amortization of Copyrights) Dec. 31 (To record amortization of Patents) Dec. 31 (To record amortization of Goodwill)

Explanation / Answer

Solution: Date Account Titles and Explanation Debit Credit Dec. 31 Amortization Expenses 27,050 Copyrights 27,050 (To record amortization of Copyrights) Working Notes: Amortization Expenses = (Cost /useful life ) x period used in the current year =($135,250 /5 ) x 12/12 =27,050 Date Account Titles and Explanation Debit Credit Dec. 31 Amortization Expenses 19,800 Patents 19,800 (To record amortization of Patents) Working Notes: Amortization Expenses = (Cost /useful life ) x period used in the current year =($118,800 /5 ) x 10/12 =19,800 Date Account Titles and Explanation Debit Credit Dec. 31 No entry (To record amortization of Goodwill) Goodwill is not amortized but impaired when impairment event triggered. Please feel free to ask if anything about above solution in comment section of the question.

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