| Revising Depreciation |
| Odessa Drones Inc has a patent on a specialized drone. The company has amortized the patent on a straight-line basis for the past 4 years, when it was acquired at a cost of $10.8 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the beginning of this year. |
| a. | calculate the current annual amortization |
| Cost |
| Current usefule life |
| Depreciation per year | ERROR:#DIV/0! |
| b. | Calculate the Amortiztion to date and unamorrtized balance |
| Annual amortization |
| Years in service |
| Unamortized balance |
| c. | Calculate the new annual amortization |
| Unamortized balance |
| Estimated remaining useful life |
| New Annual Amortization |
| d. | Prepare the journal entry for the annual amortization |
| Debit | Credit |