Problem: Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by Dische Corporation in 2007.
1. Dische developed a new manufacturing process, incurring research and development costs of $150,000. The company also purchased a patent for $37,400. In early January Dische capitalized $187,400 as the cost of the patents. Patent amortization expense of $9,370 was recorded based on a 20-year useful life.
2. On July 1, 2007, Dische purchased a small company and as a result acquired goodwill of $60,000. Dische recorded a half-year's amortization in 2007, based on a 40-year life ($740 amortization). The goodwill has an indefinite life.
Instructions:
Prepare all journal entries necessary to correct any errors made during 2007. Assume books have not yet been closed for 2007.