ACC 21026102 Chapter 12 In class exercise on Patent amortiza

ACC 2102/6102 Chapter 12: In class exercise on Patent amortization Assume the following: Adjusting entries made each December 31st (once a year) January 1, 20x1: Purchased a patent; 9 year estimated life September 1, 20x3: Legal costs incurred to successfully defend the patent 17,100 December 31, 20x3: Unadjusted balance in Patent account: |$ 88,500 Required: Determine amortization expense for 20x3

Solution

Calculate amortization expenses for december 31,20X3 :

Patent account balance of Jan 1, 20X1 = 88500-17100 = 71400

Purchase value of patent = 71400*9/7 = 91800

Amortization per year = 91800/9 = 10200

Legal cost amortization for december 31, 20X3 = 17100*4/76 = 900

So total amortization on December 31,20X3 = 10200+900 = $11,100