the straight-line method of amortization

Miracle Printers (MP) manufactures printers. Assume that MP recently paid $700.000 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 ten years.

Requirements

1. Assuming the straight-line method of amortization. make journal entries to record (a) the purchase ofthe patent and (b)
amortization for year 1.

2. After using the patent for five years. MP learns at an industry trade show that another company is designing a more efficient
printer. On the basis ofthis new information. MP decides. starting with year 6. to amortize the remaining cost ofthe patent over
two remaining years. giving the patent a total useful life of 7 years. Record amortization for year 6.

(a) Record the purchase ofthe patent.

Journal Entry
we Iimi
Year 1
Choose from any list or enter any number in the input fields, then click Check Answer.

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the straight-line method of amortization

Miracle Printers (MP) manufactures printers. Assume that MP recently paid $700.000 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 ten years.

Requirements

1. Assuming the straight-line method of amortization. make journal entries to record (a) the purchase ofthe patent and (b)
amortization for year 1.

2. After using the patent for five years. MP learns at an industry trade show that another company is designing a more efficient
printer. On the basis ofthis new information. MP decides. starting with year 6. to amortize the remaining cost ofthe patent over
two remaining years. giving the patent a total useful life of 7 years. Record amortization for year 6.

(a) Record the purchase ofthe patent.

Journal Entry
we Iimi
Year 1
Choose from any list or enter any number in the input fields, then click Check Answer.

Leave a Reply

Your email address will not be published. Required fields are marked *