Whispering Winds Corporation purchased a patent from MaFee C

Whispering Winds Corporation purchased a patent from MaFee Corp. on January 1, 2017, for $89,000. The patent had a remaining legal life of 15 years. In January 2019, Whispering Winds spends $28,000 successfully defending a patent suit. In addition, Whispering Winds now feels the patent will be useful only for another seven years. Prepare the journal entries to record the 2019 expenditure and amortization. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select \"No entry\" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

No.

Account Titles and Explanation

Debit

Credit

1.

2.

No.	Account Titles and Explanation	Debit	Credit
1.
	(To record spending for defending a patent suit)
2.
	(To record amortization of patents)

Solution

a Patents 28000             Cash 28000 Cost of patent 89000 Less Amortization = 89000*2/15= 11867 Remaining value at june 2019 77133 Add Patent suit value 28000 Total amount 105133 Life of patents 7 Amortization expense 15019 b Amortization expense 15019             Accumulated amortization patents 15019