On December 31, it was estimated that goodwill of $6,000,000 was impaired. In addition, a patent with an estimated useful economic life

On December 31, it was estimated that goodwill of $6,000,000 was impaired. In addition, a patent with an estimated useful economic life of 12 years was acquired for $1,500,000 on April 1.

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.

Answer:

a.  Dec. 31 Loss from Impaired Goodwill 6,000,000 Goodwill 6,000,000 Impaired goodwill. b.  Dec. 31 Amortization Expense—Patents 93,750

Patents 93,750 Amortized patent rights [($1,500,000 ÷ 12) × (9 ÷ 12)].