Amortization Expense For each of the following unrelated situations, calculate t

Question

Amortization Expense For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: a A patent with a 10 year remaining legal life was purchased for s300.000. The patent will be commercialy explotable for another eight years b. A patent was acquired on a device designed by a production worker. Although the cost of the p atent to date consisted of $52.300 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legallife of 10 years and is currently worth $378,000. C A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for five years was obtained at a cost of $70,000. additional cost determined at renewal). Satisfactory sales performance over the five years permits renewal of the franchise for another four years (at an General Journal Ref. Description Debit Credit To record patent amortization.

Explanation / Answer

Solution:

Debit Credit Amortization Expense - Patents 37,500 Patents 37,500 (300,000 / 8 = 37,500) Amortization Expense - Patents 5,230 Patents 5,230 (52,300/10 = 5,230) Amortization Expense - Franchisee 14,000 Franchisee 14,000 (70,000 / 5 = 14,000)

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.