Prepare all journal entries necessary to correct any errors

Reference no: EM133541758

Question:

Due to rapid turnover in the accounting department, a number of transactions involving intangible assets were improperly recorded by Farnsworth Company in 2017.

1. Farnsworth developed a new manufacturing process, incurring research and development costs of $110,000. The company also purchased a patent for $50,000. In early January, Farnsworth capitalized $160,000 as the cost of the patents. Patent amortization expense of $16,000 was recorded based on a 10-year useful life.

2. On July 1, 2017, Farnsworth purchased a small company and as a result acquired good-will of $200,000. Farnsworth recorded a half-year's amortization in 2017, based on a 50-year life ($2,000 amortization). The goodwill has an indefinite life.

Instructions
Prepare all journal entries necessary to correct any errors made during 2017. Assume the books have not yet been closed for 2017.

Reference no: EM133541758

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