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Chapter 12: Question 2BE. (page 638)

Use the information provided in BE12-1. Assume that at January 1, 2019, the carrying amount of the patent on Taylor Swift鈥檚 books is \(43,200. In January, Taylor Swift spends \)24,000 successfully defending a patent suit. Taylor Swift still feels the patent will be useful until the end of 2026. Prepare the journal entries to record the $24,000 expenditure and 2019 amortization.

Short Answer

Expert verified

Answer

Two journal entries are made to record the expenditure and amortization. The expenditure amounts to $24,000 and the amortization expense amounts to $8,400 for the year 2019.

Step by step solution

01

Journal Entry

S. no.

Particulars

JF

Debit

Credit

1.

Patents

24,000

Cash

24,000

(Being patents purchased by cash)

2.

Amortization Expense

8,400

Patents

8,400

(Being amortization made on patents)

02

Calculation of amortization

Amortization=(CarryingcAmountofPatent+DefendingCost)脳18=($43,200+$24,000)脳18=$8400

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Most popular questions from this chapter

What is meant by the term 鈥渦nderlying鈥� as it relates to derivative financial instruments.

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The following is selected information for Alatorre Company.

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Instructions:

Answer the questions asked about each of the factual situations.
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