Brief Exercise 12-2 Ayayai Corporation purchases a patent from Blossom Company o

Question

Brief Exercise 12-2 Ayayai Corporation purchases a patent from Blossom Company on January 1, 2017, for $40,000. The patent has a remaining legal life of 16 years. Ayayai feels the patent will be useful for 10 years. Assume that at January 1, 2019, the carrying amount of the patent on Ayayai's books is $32,000. In January, Ayayai spends $20,000 successfully defending a patent suit. Ayayai still feels the patent will be useful until the end of 2026. Prepare the journal entries to record the $20,000 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 accounit titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit To record expenditure of patents) To record amortization expense) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

Explanation / Answer

Journal Entries

date

explanation

debit

credit

Jan-19

patent

20000

cash

20000

Dec 31 2019

amortization expense-patent

6500

patent

6500

calculation of depreciation

value of patent/remaining life of patents

(32000+20000)/8

6500

Journal Entries

date

explanation

debit

credit

Jan-19

patent

20000

cash

20000

Dec 31 2019

amortization expense-patent

6500

patent

6500

calculation of depreciation

value of patent/remaining life of patents

(32000+20000)/8

6500

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