Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by Monty Corporation. 1.   Monty developed a new manufacturing process, incurring research and development costs of $188,000. The company also purchased a patent for $43,000. In early January, Monty capitalized $231,000 as the cost of the patents. Patent amortization expense of $11,550 was recorded based on a 20-year useful life. 2.   On July 1, 2022, Monty purchased a small company and as a result, recorded goodwill of $80,000. Monty recorded a half-year’s amortization in 2022, based on a 20-year life ($2,000 amortization). The goodwill has an indefinite life. Prepare all journal entries necessary to correct any errors made during 2022. Assume the books have not yet been closed for 2022.

Question

Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by Monty Corporation.

1.   Monty developed a new manufacturing process, incurring research and development costs of $188,000. The company also purchased a patent for $43,000. In early January, Monty capitalized $231,000 as the cost of the patents. Patent amortization expense of $11,550 was recorded based on a 20-year useful life.
2.   On July 1, 2022, Monty purchased a small company and as a result, recorded goodwill of $80,000. Monty recorded a half-year’s amortization in 2022, based on a 20-year life ($2,000 amortization). The goodwill has an indefinite life.


Prepare all journal entries necessary to correct any errors made during 2022. Assume the books have not yet been closed for 2022. 

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