Bright Designs Ltd. began operations in 20X5 and, at the

Bright Designs Ltd. began operations in 20X5 and, at the end of its first year of operations, reported a balance of $896,900 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. $ 13,700 

1 Feb. Patent registration; legal fees re: patent with 20 year life to be used in research activities. 7,400 

1 July Operating expenses, first six months. 325,600 

1 Aug. Goodwill; excess of purchase price of an advertising company paid over tangible assets acquired. 236,800

 10 Nov. Copyright acquired; remaining legal life is 

29 years but economic life is 10 years. 30,700 

30 Nov. Trademark registration; legal fees. The trademark is expected to have an indefinite economic life. 12,200 

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. 41,900 

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. 228,600 $ 896,900 

Required: 

1. Prepare a 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.) 

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.)