Brief Exercise 12-2 Monty Corporation purchases a patent from Sandhill Company o

Question

Brief Exercise 12-2

Monty Corporation purchases a patent from Sandhill Company on January 1, 2017, for $66,000. The patent has a remaining legal life of 16 years. Monty feels the patent will be useful for 10 years. Assume that at January 1, 2019, the carrying amount of the patent on Monty’s books is $52,800. In January, Monty spends $24,800 successfully defending a patent suit. Monty still feels the patent will be useful until the end of 2026.

Prepare the journal entries to record the $24,800 expenditure and 2019 amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation Debit Credit (To record expenditure of patents) (To record amortization expense)

Explanation / Answer

Journal entry :

Date account and explanation debit credit Jan 1, 2019 Patent 24800 Cash 24800 (To record expenditure of patents) Dec 31, 2019 Amortization expense (52800+24800/8) 9700 Accumlated amortization-Patent 9700 (To record amortization expense)

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