Reference no: EM132621117

Bright Designs Ltd. began operations in 20X5 and, at the end of its first year of operations, reported a balance of $650,800 in an account called "intangibles." Upon further investigation, it is discovered that the account had been debited throughout the year as follows:

5 Jan. Organization costs; legal fees. Economic life is indefinite. $10,600

1 Feb. Patent registration; legal fees re: patent with 20 year life to be used in research activities. 5,400

1 July Operating expenses, first six months. 237,600

1 Aug. Goodwill; excess of purchase price of an advertising company paid over tangible assets acquired. 172,800

10 Nov. Copyright acquired; remaining legal life is 29 years but economic life is 10 years. 22,700

30 Nov. Trademark registration; legal fees. The trademark is expected to have an indefinite economic life. 8,700

5 Dec. Staff training costs; staff is expected to stay with the company for an average of three years; however, there are no employment contracts. 29,900

31 Dec. Research costs incurred over the year; 40% of all research costs are properly classified as capitalizable development costs. The product developed will begin commercial production next year. 163,100 $650,800

Required:

Problem 1. Prepare correcting entry that reallocates all amounts charged to intangibles to the appropriate accounts. State any assumptions made. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Problem ??2. Calculate amortization expense on intangible assets for 20X5. Straight-line amortization, to the exact month of purchase, is used. All residual values are expected to be zero. (Round your answers to the nearest whole dollars.)