Question

ebook Show Me How Calculator Printem amortization Entries een Company acquired patent rights on January 10 of Year 1 for $416,000. The patent has a useful life equal to its legal life of eight years. On Lanuary 7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $21,000. If required, round your answer to the nearest dollar a. Determine the patent amortization expense for the Year 4 ended December 31. For intangible assets with finite lives, a company uses the straight-line method to calculate amortization. If a company successfully defends a patent it becomes part of the cost of the patent. If the company loses a lawsuit regarding a patent infringement, then the patent is written oft Learning Objective 5. . Journalize the adjusting entry on December 1 of Year 4 to recognize the amortization Amortation Expense Patents Patents Deck My Work oo е в боомо Previous Next > * 4 4 1/2018

Answer 1

Particulars	Amount
Cost for acquiring patent rights	$ 416,000
Useful legal life	8

Patent amortization expenses = Cost of acquiring rights/ Use ful legal life

Patent amortization expenses = 416,000/8

Patent amortization expenses = $ 52,000

Patent amortization expenses for current year

Particulars	Amount
Patent amortization expenses	$ 52,000
Add; Law suit cost 21,000/5	$4,200
Total Expenses	$56,200

Journal entry on December 31 to recognize amortization

Particulars	Debit	Credit
Amortization Expenses Patents	$ 56,200
Accumulated Amortization Expenses		$ 56,200

Amortization is used to reduce the book value of the intangible asset on the balancesheet .