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
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
Related questions
Question
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 |
CHART OF ACCOUNTS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kleen Company | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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|
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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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