On January 1, 2009 Gordon Company purchased a patent for $420,000 from an inventor. At the time of the purchase, the patent had a remaining legal life of 10 years.
(1) Prepare the journal entry to record amortization of the patent on December 31, 2009 assuming that no contra account is used.
(2) At the end of 2012 after amortization had been recorded through December 31, 2011, Gordon Company concluded that the estimated fair value of the patent is $200,000 as required to test for impairment. Record the impairment if necessary.