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24 April, 00:50

Grouper Corporation purchases a patent from Sheridan Company on January 1, 2017, for $46,000. The patent has a remaining legal life of 16 years. Grouper feels the patent will be useful for 10 years. Prepare Grouper's journal entries to record the purchase of the patent and 2017 amortization

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  1. 24 April, 04:49
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    We first register the purchase of the patent:

    Account Debit Credit

    Cash $46,000

    Patent $46,000

    Now we register the amortization for the first year. Because the useful life is 10 years, then, each year the patent will lose $4,600 of its value ($46,000 / 10 = $4,600)

    Account Debit Credit

    Amortization $4,600

    Patent $4,600
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