Conrad Inc. purchased a patent for $2,900,000 for "a specialty line of patented switch plate covers and outlet plate covers specifically designed to light up automatically when the power fails." Assume the switch plate patent was purchased January 1, 2020, and it is being depreciated over a period of ten years. Assume that Conrad Inc. does not use an accumulated amortization account but instead charges amortization directly against the intangible asset account. Required: 1. This part of the question is not part of your Connect assignment. 2. Prepare the journal entries to record the purchase and amortization of the switch plate patent in 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No 1 2 Event No 1 a b Patent Event a Answer is complete but not entirely correct. Bad debt expense Amortization expense Patent Impairment loss Patent General Journal Debit 29,000,000 > Answer is complete and correct. General Journal 290,000 3. After a year of unsuccessful attempts to manufacture the switch plate covers, Conrad Inc. determined the patent was significantly impaired and its book value on January 1, 2020, was written off. Prepare the journal entry to record the impairment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Credit Debit 2,610,000 29,000,000 > 290,000 Credit 2,610,000
Conrad Inc. purchased a patent for $2,900,000 for "a specialty line of patented switch plate covers and outlet plate covers specifically designed to light up automatically when the power fails." Assume the switch plate patent was purchased January 1, 2020, and it is being depreciated over a period of ten years. Assume that Conrad Inc. does not use an accumulated amortization account but instead charges amortization directly against the intangible asset account. Required: 1. This part of the question is not part of your Connect assignment. 2. Prepare the journal entries to record the purchase and amortization of the switch plate patent in 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No 1 2 Event No 1 a b Patent Event a Answer is complete but not entirely correct. Bad debt expense Amortization expense Patent Impairment loss Patent General Journal Debit 29,000,000 > Answer is complete and correct. General Journal 290,000 3. After a year of unsuccessful attempts to manufacture the switch plate covers, Conrad Inc. determined the patent was significantly impaired and its book value on January 1, 2020, was written off. Prepare the journal entry to record the impairment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Credit Debit 2,610,000 29,000,000 > 290,000 Credit 2,610,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Conrad Inc. purchased a patent for $2,900,000 for "a specialty line of patented switch plate covers and outlet plate covers specifically
designed to light up automatically when the power fails." Assume the switch plate patent was purchased January 1, 2020, and it is
being depreciated over a period of ten years. Assume that Conrad Inc. does not use an accumulated amortization account but instead
charges amortization directly against the intangible asset account.
Required:
1. This part of the question is not part of your Connect assignment.
2. Prepare the journal entries to record the purchase and amortization of the switch plate patent in 2020. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field.)
No
1
2
Event
No
1
a
b
Event
Patent
a
Answer is complete but not entirely correct.
Bad debt expense
Amortization expense
Patent
Impairment loss
Patent
General Journal
Debit
29,000,000 X
3. After a year of unsuccessful attempts to manufacture the switch plate covers, Conrad Inc. determined the patent was significantly
impaired and its book value on January 1, 2020, was written off. Prepare the journal entry to record the impairment. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account field.)
Answer is complete and correct.
General Journal
290,000
Credit
Debit
2,610,000
29,000,000 X
290,000
Credit
2,610,000
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