Jazz Company purchased for $177,000 a patent for a new sound system

Journal entry and Amortization

Jazz Company purchased for $177,000 a patent for a new sound system. Although it gives legal protection for 20​ years, the patent is expected to provide the company with a competitive advantage for only six years.

After using the patent for two​ years,Poolz Music​ Company’s research director learns at a professional meeting that Warner is designing a more powerful system. On the basis of this new​ information,Poolz Music Company determines that the​ patent’s total useful life is only four years. Record amortization for year 3.

Make journal entries to record​:

(a) the purchase of the patent

(b) Record the amortization for year 1.

(c) Record amortization for year 3.

Here’s the SOLUTION

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