useful life of 10 years with no residual value. On December 31. 2017, before any
ID: 2399169 • Letter: U
Question
useful life of 10 years with no residual value. On December 31. 2017, before any adjustments were recorded for Martnez, Inc. aoquired a patent on January 1, 2010 for $41.500 cash. The patent was estimated to have a the year, management determined that the remaining useful life was 7 years (with that new estimate being effective as of January 1. 2017). On June 30, 2018, the patent was sold for $26.500. (If no entry is required for a transactionlevent, select "No Journal Entry Required" in the first account field.) Required: a. Prepare the journal entry to record the acquisition of the patent on January 1. 2018. View transaction list Journal entry worksheet Record the entry for acquisition of patent. Note: Enter debits before credits Date General Journal DebitCredit January 01 2016 Record entry Clear entry View general journal Prepare the ?ourras entry to record the annual amonaab-for 2015 View list Journal entry worksheetExplanation / Answer
Answers
A
Cost
$ 41,500.00
B
Life [in years]
10
C=A/B
Annual amortisation
$ 4,150.00
D=C
2016 amortisation
$ 4,150.00
E=A - D
Beginning book value on 1 jan, 2017
$ 37,350.00
F
Remaining Useful life [in years]
7
G = E/F
New revised annual amortisation
$ 5,336
H = G
2017 amortisation
$ 5,336
I = G x 6/12
2018 amortisation, till June 30, 2018
$ 2,668
J = E - H - I
Book Value at the time of sale
$ 29,346
K
Sold for
$ 26,500
L = J - K
Loss on Sale
$ 2,846
Date
Accounts title
Debit
Credit
01-Jan-16
Patent
$ 41,500.00
Cash
$ 41,500.00
[patent acquired for cash]
31-Dec-16
Amortisation expense - Patent
$ 4,150.00
Accumulated Amortisation - Patent
$ 4,150.00
Requirement 'c'
Answer = $ 5,336
See workings above 'Column H'
Requirement 'd'
Answer = Loss = $2,846
See workings above 'Column L'
Date
Accounts title
Debit
Credit
30-Jun-18
Cash
$ 26,500.00
Accumulated Amortisation – Patent [4150+ 5336 + 2668]
$ 12,154.00
Loss on sale (of patent)
$ 2,846.00
Patent
$ 41,500.00
[Patents sold at loss]
A
Cost
$ 41,500.00
B
Life [in years]
10
C=A/B
Annual amortisation
$ 4,150.00
D=C
2016 amortisation
$ 4,150.00
E=A - D
Beginning book value on 1 jan, 2017
$ 37,350.00
F
Remaining Useful life [in years]
7
G = E/F
New revised annual amortisation
$ 5,336
H = G
2017 amortisation
$ 5,336
I = G x 6/12
2018 amortisation, till June 30, 2018
$ 2,668
J = E - H - I
Book Value at the time of sale
$ 29,346
K
Sold for
$ 26,500
L = J - K
Loss on Sale
$ 2,846
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