Question

Flint Corporation purchases a patent from Carla Vista Company on January 1, 2020, for $48,000. The patent has a remaining legal life of 16 years. Flint feels the patent will be useful for 10 years. Assume that at January 1, 2022, the carrying amount of the patent on Flint’s books is $38,400. In January, Flint spends $30,400 successfully defending a patent suit. Flint still feels the patent will be useful until the end of 2029.

Answer 1

patent 30,400 debit

cash 30,400 credit

--to record the succesfully defense of the patent--

amortization expense 8,650 debit

patent 8,650 credit

--to record depreicationon patent--

Step-by-step explanation:

At January 2022 we successfully defend the patent we can capitalized this in the patent account instead of posting an expense account.

We will also extend the useful life thus we should recalcualtethe amortization for the year ended December 31th, 2022

38,400 + 30,400 = 69,200

This patent is estimated to last until 2029 thus, 8 years:

69,200 / 8 = 8,650

We are going to amortizate the patent at this rate per year.