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Monty Products Ltd. purchased a patent on January 1, 2017, for $690,000. At the time of the purchase, the patent had a remaining legal life of 15 years. In January, 2020, Monty spent $280,000 successfully defending the patent in court. One of the other results of the court case was the discovery that the patent would only have a remaining useful life of 8 years. Monty's year-end was December 31. Prepare the entries on the books of Monty Ltd. to record (a) the purchase of the patent, (b) amortization for the first year (2017), (c) the defense of the patent, and (d) amortization for 2020. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.)

Monty Products Ltd. purchased a patent on January 1, 2017, for $690,000. At the time of the purchase, the patent had a remaining legal life of 15 years. In January, 2020, Monty spent $280,000 successfully defending the patent in court. One of the other results of the court case was the discovery that the patent would only have a remaining useful life of 8 years. Monty's year-end was December 31. Prepare the entries on the books of Monty Ltd. to record (a) the purchase of the patent, (b) amortization for the first year (2017), (c) the defense of the patent, and (d) amortization for 2020. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Munabhai 

Monty Products Ltd. purchased a patent on January 1, 2017, for $690,000. At the time of the purchase, the patent had a remaining legal life of 15 years. In January, 2020, Monty spent $280,000 successfully defending the patent in court. One of the other results of the court case was the discovery that the patent would only have a remaining useful life of 8 years. Monty's year-end was December 31. Prepare the entries on the books of Monty Ltd. to record (a) the purchase of the patent, (b) amortization for the first year (2017), (c) the defense of the patent, and (d) amortization for 2020. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) No. Account Titles and Explanation (a) Intangible Assets - Patents (b) (c) (d) Cash (To record the purchase of the patent.) Amortization Expense Accumulated Amortization - Patents (To record 2017 amortization.) Intangible Assets - Patents Cash (To record the legal defense of the patent.) Amortization Expense Accumulated Amortization - Patents Debit 690000 46000 280000 92444 Credit 690000 46000 280000 92444
Transcribed Image Text:Monty Products Ltd. purchased a patent on January 1, 2017, for $690,000. At the time of the purchase, the patent had a remaining legal life of 15 years. In January, 2020, Monty spent $280,000 successfully defending the patent in court. One of the other results of the court case was the discovery that the patent would only have a remaining useful life of 8 years. Monty's year-end was December 31. Prepare the entries on the books of Monty Ltd. to record (a) the purchase of the patent, (b) amortization for the first year (2017), (c) the defense of the patent, and (d) amortization for 2020. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) No. Account Titles and Explanation (a) Intangible Assets - Patents (b) (c) (d) Cash (To record the purchase of the patent.) Amortization Expense Accumulated Amortization - Patents (To record 2017 amortization.) Intangible Assets - Patents Cash (To record the legal defense of the patent.) Amortization Expense Accumulated Amortization - Patents Debit 690000 46000 280000 92444 Credit 690000 46000 280000 92444
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