CUNYfirst Legin Intro to Accounting for NonMajors 7e eyPLUS

CUNYfirst Legin Intro to Accounting for Non-Majors 7e eyPLUS Kimmel, Financal Accounting, 7 Read, Study &Practice; ment > Open Assignment Brief Exercise 9-10 Downs Company purchases a patent for $156,000 on January 2, 2014. Its estimated useful life is 6 years (a) Prepare the journal entry to record amortization expense for the first year. (Cred pter 9.10 wework indented when amount is entered. Do not indent it account titles are automatically eview Score eview Results by Study Objestive (b) Show how this patent is reported on the balance sheet at the end of the frst year Initangible Assets ssvero\" LATER on Attempts:of 3 used MacBook Air

Solution

Patent is an intangible assets reported in the company\'s balance sheet. Like any other assets intangible assets are amortize over its useful life. Formula to amortize=(Depreciable amountof Intagible assets-Residual value)/Useful Life Residual Value=It is the amount which an enterprise expects to obtain for an assets at the end of its useful life after deducted the expected cost of disposal. Downs Company Calculating amortization of patent. Amortization Expense Purchase Price of Patent $      156,000.00 Useful life 6 Years Amortization Expense $        26,000.00 Journal Entries Accounts Title & Explaination Debit Credit a) Amortization Expense $        26,000.00     To Patent $ 26,000.00 b) Partial Balance sheet Assets Fixed Assets Intangible Assets Patent net of amortization($156000-$26000) $      130,000.00