Prepare the journal entries to correct the accounting error

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Reference no: EM132951768

Blue Company discovered an error in its accounting records in 2021. Blue acquired patents costing $540,000 on January 1, 2019. The patents have been amortized on a straight-line basis over their 15-year legal life. However, Blue's accountant neglected to obtain an estimate of the patent's economic life, which was only 5 years. Blue Company used a calendar fiscal-year and was subject to a 30% tax rate and follows ASPE.

Problem 1: Prepare the journal entries to correct the accounting error and record patent amortization for 2021.

Reference no: EM132951768

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