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Question: Selected accounts of the Mayo Medical Labs

Selected accounts of the Mayo Medical Labs are listed below. Also given are some transactions and events that took place at the company during 20X1. INSTRUCTIONS 1. Record in general journal form the transactions for 20X1 described. 2. Record amortization of the intangible assets for the year ended December 31, 20X1. 3. Indicate what steps should be taken, if any, to properly account for the balance of $1,200,000 in the Goodwill account on December 31. The following accounts related to intangible assets are found in Mayo’s general ledger: ACCOUNTS Cash: Research and Development Expense Patents: Amortization of Patents Computer Software: Amortization of Computer Software Goodwill: Impairment of Intangibles
Selected accounts of the Mayo Medical Labs are listed below. Also given are some transactions and events that took place at the company during 20X1.
INSTRUCTIONS
1. Record in general journal form the transactions for 20X1 described.
2. Record amortization of the intangible assets for the year ended December 31, 20X1.
3. Indicate what steps should be taken, if any, to properly account for the balance of $1,200,000 in the Goodwill account on December 31. The following accounts related to intangible assets are found in Mayo’s general ledger:
ACCOUNTS
Cash: Research and Development Expense
Patents: Amortization of Patents
Computer Software: Amortization of Computer Software
Goodwill: Impairment of Intangibles
Analyze: Suppose that the examination of goodwill had revealed that the benefits (future profits) resulting from the acquisition two years ago are decreasing. Based on the estimated value of the excess of the future profits over the value of the net assets acquired, the value of goodwill is estimated to be currently only $2,600,000. What accounting entry, if any, should be made to record this fact?

Analyze: Suppose that the examination of goodwill had revealed that the benefits (future profits) resulting from the acquisition two years ago are decreasing. Based on the estimated value of the excess of the future profits over the value of the net assets acquired, the value of goodwill is estimated to be currently only $2,600,000. What accounting entry, if any, should be made to record this fact?


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> What is a purchase return?

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> What is the purpose of a credit memorandum?

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