Martinez, Incorporated acquired a patent on January 1, 2020 for $41,000 cash. The patent was estimated to have a useful life of 10 years with no residual value. On December 31, 2021, before any adjustments were recorded for the year, management determined that the remaining useful life was 6 years (with that new estimate being effective as of January 1, 2021). On June 30, 2022, the patent was sold for $26,000. Required: a. Prepare the journal entry to record the acquisition of the patent on January 1, 2020. b. Prepare the journal entry to record the annual amortization for 2020. c. Compute the amount of amortization that would be recorded in 2021. d. Determine the gain (loss) on sale on June 30, 2022. e. Prepare the journal entry to record the sale of the patent on June 30, 2022. Complete this question by entering your answers in the tabs below. Req A and B Req C Req D Amount of Amortization Req E Compute the amount of amortization that would be recorded in 2021. (Round your final answer to the nearest whole dollar.) < Req A and B < Prev Req D > 4 of 5 Next >
Martinez, Incorporated acquired a patent on January 1, 2020 for $41,000 cash. The patent was estimated to have a useful life of 10 years with no residual value. On December 31, 2021, before any adjustments were recorded for the year, management determined that the remaining useful life was 6 years (with that new estimate being effective as of January 1, 2021). On June 30, 2022, the patent was sold for $26,000. Required: a. Prepare the journal entry to record the acquisition of the patent on January 1, 2020. b. Prepare the journal entry to record the annual amortization for 2020. c. Compute the amount of amortization that would be recorded in 2021. d. Determine the gain (loss) on sale on June 30, 2022. e. Prepare the journal entry to record the sale of the patent on June 30, 2022. Complete this question by entering your answers in the tabs below. Req A and B Req C Req D Amount of Amortization Req E Compute the amount of amortization that would be recorded in 2021. (Round your final answer to the nearest whole dollar.) < Req A and B < Prev Req D > 4 of 5 Next >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Please answer with working narrations for all parts in text form
Transcribed Image Text:Martinez, Incorporated acquired a patent on January 1, 2020 for $41,000 cash. The patent was estimated to have a useful life of 10
years with no residual value. On December 31, 2021, before any adjustments were recorded for the year, management determined that
the remaining useful life was 6 years (with that new estimate being effective as of January 1, 2021). On June 30, 2022, the patent was
sold for $26,000.
Required:
a. Prepare the journal entry to record the acquisition of the patent on January 1, 2020.
b. Prepare the journal entry to record the annual amortization for 2020.
c. Compute the amount of amortization that would be recorded in 2021.
d. Determine the gain (loss) on sale on June 30, 2022.
e. Prepare the journal entry to record the sale of the patent on June 30, 2022.
Complete this question by entering your answers in the tabs below.
Req A and B
Req C
Req D
Amount of Amortization
Req E
Compute the amount of amortization that would be recorded in 2021. (Round your final answer to the nearest whole
dollar.)
< Req A and B
< Prev
Req D >
4 of 5
Next >
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