On January 1,2018, Weaver Corporation purchased a patent for $255,000. The remai
ID: 2437842 • Letter: O
Question
On January 1,2018, Weaver Corporation purchased a patent for $255,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2020, the company incurred legal fees of $75,000 in successfully defending a patent infringement suit. The successful defense did not change the company's estimate of useful life. Weaver Corporation's year-end is December 31. Required: 1. Record the purchase in 2018; amortization in 2018; amortization in 2019; legal fees in 2020; and amortization in 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 4 Record the patent purchase. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2018 2. What is the balance in the Patent account at the end of 2020? Balance in Patent accountExplanation / Answer
Cost of patent: 255000 Divide: Life of Patent 6 Amortization expense annual 42500 Book value of Patents in 2020 170000 Add: Legal cost 75000 Total Book vale on Jan 2020 245000 Divide: Remaining Life 4 Annual Amortization from 2020 61250 Journal entries: Date Accounts title and explanations Debit $ Credit $ Jan1 2018 Patents right Account Dr. 255000 Cashh account 255000 31.12.18 Amortization expense Account Dr. 42500 Accumulated Amortization Account 42500 31.12.19 Amortization expense Account Dr. 42500 Accumulated Amortization Account 42500 01.01.2020 Patents right Account Dr. 75000 Cash account 75000 31.12.20 Amortization expense Account Dr. 61250 Accumulated Amortization Account 61250 Balance of Patents at end 2020: Total cost of Patents (255000+75000) 330000 Less: Accumulated Amortization 146250 (42500*2+61250) Book Value of Patents right 183750