The general journal of Kevin Berry Industries included the following entries rel

Question

The general journal of Kevin Berry Industries included the following entries relating to various expenditures during 20X5. Review this information and prepare corresponding entries to record any necessary straight-line amortization or other impairment for the year ending December 31.
GENERAL JOURNAL
Date Accounts Debit Credit
1-Jan Patent 30,000
Cash 30,000
Acquired a patent from an inventor.   The patent has a 15-year remaining legal life, but it is expected that Berry will utilize the patent for only 5 years.

15-May Research Expense 12,000
Cash 12,000
Incurred costs in research and development activity. It is possible these costs will result in new product with a 48-month life.

1-Sep Inventory 25,000
Building 75,000
Goodwill 50,000
Cash 150,000
To record purchase of business, expected to be operated successfully for an indefinite number of future years.

20-Dec Copyright 10,000
Cash 10,000
Purchased copyright to a video production, but concluded that it was worthless by year's end.

GENERAL JOURNAL  
Date Accounts Debit Credit

Explanation / Answer

Date Accounts Debit Credit Dec. 31 Amortization Expense $6,000 Patents $6,000 (Patent = 30,000 / 5years = $6,000) Dec. 31 Depreciation Expense $1250 Accumulated depreciation - Buiding $1250 (As useful life of Building is not provided thus presumed to be 20 years) ( 75,000 / 20 *4/12 = $1,250)

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