Kleen Company acquired patent rights on January 10 of Year 1 for $918,000. The patent has a useful life equal to its legal life of 8 years. On January 7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $54,000.   Required: a. Determine the patent amortization expense for Year 4 ended December 31. b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization.     CHART OF ACCOUNTS     Kleen Company     General Ledger       ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 123 Delivery Truck 124 Accumulated Depreciation-Delivery Truck 125 Equipment 126 Accumulated Depreciation-Equipment 130 Mineral Rights 131 Accumulated Depletion 132 Goodwill 133 Patents   LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable   EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends   REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment 622 Gain on Sale of Patents   EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Delivery Truck 523 Delivery Expense 524 Repairs and Maintenance Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Equipment 533 Depletion Expense 534 Amortization Expense-Patents 535 Insurance Expense 536 Supplies Expense 539 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Delivery Truck 721 Loss on Sale of Equipment 722 Loss on Sale of Patents a. Determine the patent amortization expense for Year 4 ended December 31. Additional Instruction b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization. General Journal Instructions

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 8P
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Kleen Company acquired patent rights on January 10 of Year 1 for $918,000. The patent has a useful life equal to its legal life of 8 years. On January 7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $54,000.
  Required:
a. Determine the patent amortization expense for Year 4 ended December 31.
b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization.
    CHART OF ACCOUNTS
    Kleen Company
    General Ledger
 
 
  ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
114 Interest Receivable
115 Notes Receivable
116 Merchandise Inventory
117 Supplies
119 Prepaid Insurance
120 Land
123 Delivery Truck
124 Accumulated Depreciation-Delivery Truck
125 Equipment
126 Accumulated Depreciation-Equipment
130 Mineral Rights
131 Accumulated Depletion
132 Goodwill
133 Patents
  LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
  EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
 
REVENUE
410 Sales
610 Interest Revenue
620 Gain on Sale of Delivery Truck
621 Gain on Sale of Equipment
622 Gain on Sale of Patents
  EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Delivery Truck
523 Delivery Expense
524 Repairs and Maintenance Expense
529 Selling Expenses
531 Rent Expense
532 Depreciation Expense-Equipment
533 Depletion Expense
534 Amortization Expense-Patents
535 Insurance Expense
536 Supplies Expense
539 Miscellaneous Expense
710 Interest Expense
720 Loss on Sale of Delivery Truck
721 Loss on Sale of Equipment
722 Loss on Sale of Patents
a. Determine the patent amortization expense for Year 4 ended December 31.
Additional Instruction
b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization.
General Journal Instructions

 

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