Question

miracle printers (MP) manufactures printers. Assume that MP Recently paid $300,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent is expected to provide a competitive advantage for only eight years.

* Requirements 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. 2. After using the patent for four years, MP learns at an industry trade show that another company is designing a more efficient printer. On the basis of this new information, MP decides, starting with Year 5, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful life of six years. Record amortization for Year 5.

after using the patent for four years MP learns at an industry trade show that another company is designing a more efficient printer. On the basis of this new information, MP decides, starting with year five, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful life of six years. Record amortizarion of year five.

Answer 1

An intong ble astet should be netognited in books of Accounts iit atisly the a830t heopaition Chiteniaie Tt &probable that futune economiC to the entity The (ost ol tre asset should be measuned neliably iatangble as2et it vwill measuned at Cost to the entity iatange At the time oinitial getapnifion ofan Hhe Total cost equals the purchese paice of S0, in the givan &ituation it ispnoboble thatluuns eo aamic beneft love to the entity and tost tan b measuned naliably it will be nelopnited ot its tost ie 300 000 Ournal Entny at e time of Puenehase Panticulars Date Debit Credi ypan Patent Alc To cashlBank Alc CBaing intangible asset punchase e tonded in the hooks) Dn $.300009 $300

elAsEMate Date Foge bAmontioation is ytematic allocation of the depme cioble amount of an iatangible as2et aven its usefullife Amontiaation should tont when the assot is available fon ase Peniod of Amotiaation is thepaniad oven uhich asset isexpected to be availoble fon an entity by Rasidual value Numbenofyeans of uaful ifa Amontigation Cost Rasidual value should be sBuvae d to be anp alese Theae is a Com mitment by a thind pasty to Puachase ot at tr end of its ueaful lie मणी intis guertion haugh patint pive& legas pactediseoz 20yeans perte nt is expeeto d to Paovidle a loapetitive adlanto ge fan anly Byoars So, usafullife= ayeane Thene & on active manket AL nathing i2 iven in gue stion 9n0sidualaluezno So Amcarigestion forn eas 3000s.oO Eyeens 3,500 Debit Cnadit Den $.33,50 Losticulars nate Amantigation opnteL 10 Patent A $33, Soo arag Amontigadion expense fon ist fron netoaded

elassMate Date Page tion poniod and tha amontisotion me-thod lon an intangihle assetuith o haite Amontiga 2 useful tife shal he tosieuded bet leait ot change lach finanaial ye an-end Tthene is a in usoful life ahe assat huch chonge he actaunted fen as changesin actaunting 024 and eill ho accountod on prospa tively Tin the given question at the ond of ye0n it was decidedlthat use hullife ol the as2et i2 only 6yeans So amatigetion expauie wil be Chanped yen the next yeon & aysans -yeasl and ill be actounted pmspac tively Reek Cannying Amot of Asset oat hagining ofeas Cost ol ftongible As3et Acguined $300.098 -7 Acanstigatina apnse foyaces 300000-e =0150u0 $1.9.co lasaying Anount Co 150000 uail be Amotiged oven t2ye Aocertigadion fon s yeats 2 yeasr& Since nothing is given ia guestion ne2idua Nalue is assumed to be Zeno $5,000

alassate Date Pege Tounal ontay fer ye Debit Cnedit Den 5,00 $7500 Panticulars Date adof Amtontigaetion expense Alc (lL ale) 10 latent Alc eing Amonetigatioa expenie fet year retagniged