Pina Corporation purchases a patent from Blossom Company on January 1, 2020, for $59,000. The patent has a remaining legal life of16 years. Pina feels the patent will be useful for 10 years. Assume that at January 1, 2022, the carrying amount of the patent on Pina'sbooks is $47,200. In January, Pina spends $24,000 successfully defending a patent suit. Pina still feels the patent will be useful untilthe end of 2029.Prepare the journal entries to record the $24,000 expenditure and 2022 amortization. (Credit account titles are automatically indentedwhen amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)Account Titles and Explanation(To record expenditure of patents)(To record amortization expense)DebitCredit11

Answered: Pina Corporation purchases a patent…

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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Pina Corporation purchases a patent from Blossom Company on January 1, 2020, for $59,000. The patent has a remaining legal life of
16 years. Pina feels the patent will be useful for 10 years. Assume that at January 1, 2022, the carrying amount of the patent on Pina's
books is $47,200. In January, Pina spends $24,000 successfully defending a patent suit. Pina still feels the patent will be useful until
the end of 2029.
Prepare the journal entries to record the $24,000 expenditure and 2022 amortization. (Credit account titles are automatically indented
when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Account Titles and Explanation
(To record expenditure of patents)
(To record amortization expense)
Debit
Credit
11

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Step 1

A patent is a legal protection granted by a government to inventors for their original inventions, which gives them the exclusive right to manufacture, use, and sell their invention for a specified period of time, typically 20 years from the date of filing the patent application. In exchange for this exclusive right, the inventor must publicly disclose their invention, providing detailed information on how to make and use it, so that others can learn from it and build upon it in the future.

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