Exercise 10-12 The following are selected 2017 transactions of Pedigo Corporatio

Question

Exercise 10-12 The following are selected 2017 transactions of Pedigo Corporation. Jan. 1 Purchased a small company and recorded goodwill of $154,000. Its useful ife is indefinite May 1 Purchased for $112,500 a patent with an estimated usefulIife of 5 years and a legal life of 19 years. Prepare necessary adjusting entries at December 31 to record amortization required by the events above. (If no entry is required, select "No entry"for the account and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually Date Account Titles and Explanation Debit Credit Dec. 31 (To record goodwill amortisation) Dec. 31 (To record patent amortsation)

Explanation / Answer

Please find the answer as follows:

Dec 31 - No Entry (for goodwill)

Dec 31 Amortization Expense - Patent Dr. 15,000

Patents Cr. 15,000

Notes:

Patent Amortization = 112,500/5 = 22,500

For 8 Months (1st May to 31 December) = (22,500÷12)*8 = 15,000

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