Question

On June 1, 2018, Ayayai spent $10,440 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2018. Prepare all journal entries required in 2018 and 2019.

During 2016, Ayayai Corporation spent $175,680 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2016, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $49,680 related to the patent were incurred as of October 1, 2016. Prepare all journal entries required in 2016 and 2017 as a result of the transactions above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit 2016 (To record research and development expenses) 2016 (To record legal expenses) 2016 (To record amortization expense)

In 2020, Ayayai determined that a competitor’s product would make the New Age Piano obsolete and the patent worthless by December 31, 2021. Prepare all journal entries required in 2020 and 2021.

Answer 1

Date	Account Titles and Explanation	Debit	Credit
2016	Research and development expenses	$175,860
	Cash		$175,860
	(To record research and development expenses)
2016	Patents	$49,680
	Cash		$49,680
	(To record legal expenses)
2016	Amortization Expense	$1,242		($49,680 x 1/10 x 3/12)
	Patents		$1,242
	(To record amortization expense)
2017	Amortization Expense	$4,968		($49,680 x 1/10 )
	Patents		$4,968
	(To record amortization expense)
2018	Patents	$10,440
	Cash		$10,440
	(To record legal expenses)
2018	Amortization Expense	$4,590		($4,968 x 5/12 months)	$2,070.00
	Patents		$4,590	($10,440/12 x 7/12 months)	$507.50
	(To record amortization expense)			($49,680 - $1,242 - $4,968 - $2,070)/12 x 7/12 months	$2,012.50
					$4,590.00
2019	Amortization Expense	$4,320		($10,440/12 )	$870.00
	Patents		$4,320	($49,680 - $1,242 - $4,968 - $2,070)/12	$3,450.00
	(To record amortization expense)				$4,320.00
2020	Amortization Expense	$22,500		($49,680 + $10,440 - $1,242 - $4,968 - $4,590 - $4,320)/2
	Patents		$22,500
2021	Amortization Expense	$22,500
	Patents		$22,500