Asked by Michelle Carnes on May 01, 2024
Verified
On December 31, Bowman Company estimated that goodwill of $80,000 was impaired. On June 1, a patent with an estimated useful economic life of 10 years was acquired for $252,000.Required
(a) Journalize the adjusting entry on December 31 for the impaired goodwill.
(b) Journalize the adjusting entry on December 31 for the amortization of the patent rights.
Impaired Goodwill
A condition where the market value of goodwill, an intangible asset, falls below its recorded cost on the books, leading to a necessary write-down or adjustment.
Amortization
The process of spreading out a loan or intangible asset cost over a fixed period, affecting a company's financial statements.
Economic Life
The expected period during which an asset remains useful to the owner or within an economy.
- Record and understand the effects of asset impairment, particularly goodwill impairment.
- Measure and ledger depreciation, depletion, and amortization expenditures.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
(a)Dec. 31Loss from Impaired Goodwill80,000Goodwill80,000
(b)Dec.31Amortization Expense-Patents14,700Patents14,700Amortized Patent Rights = [
($252,000/10) × 7/12] = $14,700
(b)Dec.31Amortization Expense-Patents14,700Patents14,700Amortized Patent Rights = [
($252,000/10) × 7/12] = $14,700
Learning Objectives
- Record and understand the effects of asset impairment, particularly goodwill impairment.
- Measure and ledger depreciation, depletion, and amortization expenditures.