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    Adjusting entries for a patent and goodwill

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    Please help with the following problem.

    The following are selected 2006 transactions of Yosuke Co.:

    Jan 1 Purchased a small company and recorded goodwill of $150,000.Its useful life is indefinite.

    May 1 Purchased for $60,000 a patent with an estimated useful life of 5 yrs. and a legal life of 20 yrs.

    Instructions: Prepare necessary adjusting entries at Dec 31st to record amortization required by the events above.

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    https://brainmass.com/business/finance/adjusting-entries-for-a-patent-and-goodwill-111088

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    Problem: The following are selected 2006 transactions of Yosuke Co.: Jan 1 Purchased a small company and recorded goodwill of $150,000.Its useful life is indefinite. May 1 Purchased for $60,000 a patent with an estimated useful life of 5 yrs. and a legal life of 20 yrs. Instructions: Prepare necessary adjusting entries at Dec 31st to record amortization required by the events above.

    Solution: ...

    Solution Summary

    The solution explains the new treatment for goodwill, and give the rules for patent amortization in distinguishing between useful life and legal life. It helps prepare adjusting entries for amortization.

    $2.49

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