Accounting Help

hho9e_e9_24_eip_stud.xlsx

E9-24

Accounting, 9e
E9-24	Acquisition of patent, amortization, and change in useful life
LO 5 [10-15 minutes]
Students please fill-in areas that are shaded
Student Name
Course Name
Student ID:
Date:
Miracle Printers (MP) manufactures printers. Assume that MP recently paid $600,000
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 year 1.
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.
Test Your Knowledge
E9-24
Req. 1
Journal
DATE	ACCOUNTS AND EXPLANATIONS	DEBIT	CREDIT
Req. 1	Purchase of patent
(a)
(b)	Amortization for one year:
Req. 2	Amortization for year 5:
Calculate book value
Orginal cost	$600,000
Accm Depreciation:
Year 1
Year 2
Year 3
Year 4	- 0
Book value at beg of Yr 5	600,000
New estimated useful life remaining
New annual amortization

Jennie April 23