On April 1, 2020, the Tech Corp. acquired a patent for $162,000. This patent has an estimated useful life of 12 years with an estimated residual value of $18,000. Required: a. In determining the 12-year useful life of this patent, what two lives of the patent did Tech consider? b. Which of these two lives did Tech use as the patent's useful life or is that determinable? C. Make the December 31, 2020, entry for Tech to record the 2020 amortization of this patent in the manner that Tech would have to use in this class. d. What will be the book value of this patent on the December 31, 2023, balance sheet?

On April 1, 2020, the Tech Corp. acquired a patent for $162,000. This patent has an estimated useful life of 12 years with an estimated residual value of $18,000. Required: a. In determining the 12-year useful life of this patent, what two lives of the patent did Tech consider? b. Which of these two lives did Tech use as the patent's useful life or is that determinable? C. Make the December 31, 2020, entry for Tech to record the 2020 amortization of this patent in the manner that Tech would have to use in this class. d. What will be the book value of this patent on the December 31, 2023, balance sheet?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 5RE: Mystic Pizza Company purchased a patent from Prime Pizza Plus on January 1, 2019, for 72,000. The...

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Mystic Pizza Company purchased a patent from Prime Pizza Plus on January 1, 2019, for 72,000. The patent has a remaining legal life of 9 years. Prepare the journal entries to record the acquisition and the amortization for 2019, assuming Mystic Pizza amortizes its patents using the straight-line method over the life of the asset.
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 seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.
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ABC Co. purchased a patent on January 1, 2018 for P300,000. The patent was being amortized over its remaining legal life of 15 years. During 2020, ABC Co. determined that the economic benefits of the patent would not last longer than 10 years from the date of acquisition. What amount should be charged to patent amortization expense for the year ended December 31 2020?a. 32,500b. 26,000c. 20,000 d. 17,333 e. answer not given
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