These are selected 2017 transactions for Wyle Corporation: Jan. 1 Purchased a copyright for $120,000. The copyright has a useful life of 6 years and a remaining legal life of 30 years. Mar. 1 Purchased a patent with an estimated useful life of 4 years and a legal life of 20 years for $54,000. Sept. 1 Purchased a small company and recorded goodwill of $150,000. Its useful life is indefinite. Prepare all adjusting entries at December 31 to record amortization required by the events.

Explanation:

Workings

Note that intangible assets are amortized over the useful lifetime and not the legal life.

Copyright

Useful life = 6 years

Date of purchase = January 1

Timeline = 12 months / 1 year

Purchase price = 120,000

Amortization charges = 120,000 / 6 =  20,000

Patent

Useful life = 4

Date of purchase = Mar 1

Timeline = 10 months (March - December )

Purchase price = 54,000

Amortization charges = 54000/4 *10/12 = 11,250

Small company

Goodwill are not amortized as it has an indefinite lifetime but annually tested for impairment

Adjusting entries

Date                     Accounting title                 Debit          Credit

a) Amortization of Copyright

December 31       Amortization expenses    20,000

                                   Copyright                                          20,000

b) Amortization of patent

December 31         Amortization expenses          11,250

                                        Patent                                                  11,250

answer: true

step-by-step explanation: