Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
5th Edition
ISBN: 9780134078939
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem 9.12SE
Accounting for an intangible asset
On March 1, 2016, Twist Company purchased a patent for $168,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only five years.
Requirements
1. Journalize the purchase of the patent.
2. Journalize the amortization expense for the year ended December 31, 2016. Assume straight-line amortization.
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The Randolph Company purchased a patent on June 1, 2016 for
$1,188,000 with twelve years remaining on the patent's legal
life.
useful economic life of only nine years.
It is estimated, however, that this patent will have a
Questions:
A. Amortization Expense For 2016 & 2017:
2016
2017
B. Balance Sheet Presentation on 9/30/2019:
Note: Generally, no accumulated amortization account is generally used
for intangibles, and thus they are presented on a single line at net
book value.
C. How much can be received for the patent on 3/31/17?
D. Gain or loss before taxes if patent sold on 8/31/21 for
$300,000?
Where will this item be reported on the income
statement?
Dollar Amount
Gain or Loss?
Location on Income Statement
Chapter 9 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
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