On January 2, 2018, David Corporation purchased a patent for $700,000. The remaining legal life is...
On January 2, 2018, David Corporation purchased a patent for
$700,000. The remaining legal life is 12 years, but the company
estimated that the patent will be useful only for eight years. In
January 2020, the company incurred legal fees of $105,000 in
successfully defending a patent infringement suit. The successful
defense did not change the company’s estimate of useful life.
Required:
Prepare journal entries related to the patent for 2018, 2019, and
2020. (If no entry is required for a transaction/event,
select "No journal entry required" in the first account
field.)
Homework Answers
| January 02, 2018 | Patents | 700000 | ||
| Cash | 700000 | |||
| December 31, 2018 | Amortization expense | 87500 | =700000/8 | |
| Patents | 87500 | |||
| December 31, 2019 | Amortization expense | 87500 | =700000/8 | |
| Patents | 87500 | |||
| January 2020 | Patents | 105000 | ||
| Cash | 105000 | |||
| December 31, 2020 | Amortization expense | 105000 | =(700000-87500-87500+105000)/6 | |
| Patents | 105000 |
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