ACC231-Wolfe Spring 2018 Homework: HW08 Score: 0.5 of 1 pt &S8-14; (similar to)

Question

ACC231-Wolfe Spring 2018 Homework: HW08 Score: 0.5 of 1 pt &S8-14; (similar to) On July 1, Maynard Apps paid $1,544,400 to acquire a patent on software. Maynard Apps expects the pate Requirements 1. Journalize the entry to record the purchase of the patent on July 1 2. Journalize the entry to record amortization on December 31 Journal Entry Date Accounts Debit Credit Jul 1 Patents 1,544,400 Cash 1,544,400 Requirement 2. Journalize the entry to record amortization on December 31. (Assume no amortization ha from any journal entries.) Journal Entry Date Accounts Debit Credit 514800 Dec 31 Amortization expense Patents 514800 Choose from any list or enter any number in the input fields and then click Check Answer All parts showing

Explanation / Answer

Solution

1. Journal entry to record the purchases of patent on July 1

Journal Entry

Date

Accounts

Debit

Credit

July 1

Patents

1,544,400

     Cash

1,544,400

2. Journal entry to record amortization on December 31

Journal Entry

Date

Accounts

Debit

Credit

December 31

Amortization expenses

257,400*

     Patents

257,400

*Amortization expense:

Value of patent= $ 1,544,400   ;   Useful Life= 3 years

Amortization expense per year = $ 1,544,400   /3 = $ 514,800

As, the patents are purchased on July 1, amortization expenses will be calculated for 6 months (July1 to December 31) this year. In the next and coming year, full amount of amortization expenses will be charged.

Amortization expense this year = $ 514,800 X 6/12 = $ 257,400

Date

Accounts

Debit

Credit

July 1

Patents

1,544,400

     Cash

1,544,400

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