Los Altos, Inc. obtained a patent for a new optical scanning device. The fees incurred to file for the patent and to defend the patent in court against several companies that challenged the patent amounted to $45,000. Los Altos, Inc. concluded that the expected economic life of the patent was 12 years. Calculate the amortization expense that should be recorded in the second year. $ 0
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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- For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.Calico Inc. purchased a patent on a new drug it created. The patent cost $12,000. The patent has a life of twenty years, but Calico expects to be able to sell the drug for fifty years. Calculate the amortization expense and record the journal for the first years expense.For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life. JOURNAL Page Date Description PR DR CR
- For each of the following unrelated situations, calculate the annual amortization expense: a. A patent with a 15-year remaining legal life was purchased for $270,000. The patent will be commercially exploitable for another nine years. b. A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $42,300 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 18 years and is currently worth $378,000. c. A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for four years was obtained at a cost of $63,000. Satisfactory sales performance over the four years permits renewal of the franchise for another four years (at an additional cost determined at renewal) Annual expense a $ b $ C $For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.Using the following unrelated situations. A. A patent with a 12-year remaining legal life was purchased for $360,000. The patent will be usable for another 10 years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $700,000. The company expects to be able to use this patent for all 16 years of its life. Calculate the annual amortization expense. A. $ B. $ Prepare a journal entry to record the expense. If an amount box does not require an entry, leave it blank. А. Previous 00 B.
- Amortization Expense For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A patent with a 10-year remaining legal life was purchased for $350,000. The patent will be commercially exploitable for another eight years. A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $52,300 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 10 years and is currently worth $400,000. A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for five years was obtained at a cost of $70,000. Satisfactory sales performance over the five years permits renewal of the franchise for another three years (at an additional cost determined at renewal). General Journal Ref. Description Debit Credit a. Answer Answer…Amortization Expense For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A patent with a 10-year remaining legal life was purchased for $350,000. The patent will be commercially exploitable for another eight years. A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $52,300 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 10 years and is currently worth $400,000. A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for five years was obtained at a cost of $70,000. Satisfactory sales performance over the five years permits renewal of the franchise for another three years (at an additional cost determined at renewal). General Journal Ref. Description Debit Credit a.…Amortization Expense For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A patent with a 15-year remaining legal life was purchased for $288,000. The patent will be commercially exploitable for another nine years. A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $45,000 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 18 years and is currently worth $378,000. A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for four years was obtained at a cost of $68,000. Satisfactory sales performance over the four years permits renewal of the franchise for another four years (at an additional cost determined at renewal). General Journal Ref. Description Debit Credit a. Answer Answer…
- Using the following unrelated situations. A. A patent with a 10-year remaining legal life was purchased for $280,000. The patent will be usable for another 8 years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $38,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all 20 years of its life. Calculate the annual amortization expense. A. $ В. $ Prepare a journal entry to record the expense. If an amount box does not require an entry, leave it blank. A. В. 00Using the following unrelated situations. A. A patent with a 10-year remaining legal life was purchased for $320,000. The patent will be usable for another 8 years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $31,200, but the market value of the patent is $650,000. The company expects to be able to use this patent for all 24 years of its life. Calculate the annual amortization expense. A. $fill in the blank 0845bf02e032f96_1 B. $fill in the blank 0845bf02e032f96_2 Prepare a journal entry to record the expense. If an amount box does not require an entry, leave it blank. A. fill in the blank fill in the blank fill in the blank fill in the blank B. fill in the blank fill in the blank fill in the blank fill in the blankA crane rental company has acquired a new heavy-duty crane for $260,000. The company calculates depreciation on this equipment on the basis of a number of rentals per year, and the salvage value of the crane at the end of its 9-year life is 525,000 If the crane is rented an average of 130 days per year, what is the depreciation rate per rental? The depreciation is Sper day of rent. (Round to the nearest dollar.)