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On January 1, 2021, Weaver Corporation purchased a patent for $237,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2023, the company incurred legal fees of $57,000 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 2021; amortization in 2021; amortization in 2022; legal fees in 2023; and amortization in 2023.

Respuesta :

Parrain

Answer:

Jan 1, 2021         DR Patent                                    $237,000

                                  CR Cash                                                   $237,000

Dec 31, 2021      DR Amortization Expense          $39,500

                                  CR Patent                                               $39,500

Working

Amortization Expense = 237,000/ 6 years useful life = $39,500

Dec 31, 2022     DR Amortization Expense          $39,500

                                  CR Patent                                               $39,500

Jan 31, 2023         DR Patent                                    $57,000

                                     CR Cash                                                   $57,000

Dec 31, 2023     DR Amortization Expense          $53,750

                                  CR Patent                                               $53,750

Working

New Patent Value = (237,000 - 39,500 + 39,500 + 37,000)

= $215,000

Amortization expense = 215,000/ 4 remaining years =  $53,750

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