Martinez, Inc. acquired a patent on January 1, 2016 for S41,300 cash. The patent

Question

Martinez, Inc. acquired a patent on January 1, 2016 for S41,300 cash. The patent was estimated to have a useful life of 10 years with no residual value. On December 31, 2017, before any adjustments were recorded for 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 $26,300. (If no entry is required for a transaction event, 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, 2016. View transaction list Journal entry worksheet Record the entry for acquisition of patent. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2016 Record entry Clear entry View general journal

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a. Acquisitiion of Patent Date General Ledger Debit Credit January 1 2016 Patent 41300 Cash 41300 b. Amortisation for 2016 Date General Ledger Debit Credit January 1 2016 Amortization Expense 4130 Accumulated Amortization 4130 (41300/10 Year) c. Amortization amount for 2017 Patent Cost 41300 Less: 2016 Amortization 4130 Value at start of 2017 37170 Revised Life 7 Year Amortization amount for 2017 =37170/7=5310 d. Gain or (Loss) Patent Cost 41300 Less: 2016 Amortization 4130 Value at start of 2017 37170 Less: 2017 Amortization 5310 Less: 2018 Amortization 6 Month 5310/2 2655 Book Value as on 30th June 2018 29205 Selling Price 26300 Hence Loss -2905 e. Sale of Patent Entry Date General Ledger Debit Credit June 30 2018 Cash 26300 Accumulated Amortization 12095 4130+5310+2655 Loss on Sale of Patent 2905 Patent 41300

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