Pronghorn Corporation purchases a patent from Larkspur Inc. on July 1, 2017, for $267,000. The patent has a remaining legal life of 9years. Pronghorn estimates the patent will have a useful life of 4 years, based on expected product innovations in the market.Prepare Pronghorn's journal entries to record the purchase of the patent and 2017 amortization. (Credit account titles are automaticallyindented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for theamounts.)Account Titles and ExplanationDebitCreditPatentsCash(To record purchase of patents)Amortization ExpensePatents(To record amortization of patents)2670006675026700066750

The patent is amortized over the 4 years, which is the useful life, instead of the legal life.

Answered: Pronghorn Corporation purchases a…

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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Blossom Limited purchased a machine on account on April 1, 2021, at an invoice price of $365,470. On April 2, it paid $2,170 for delivery of the machine. A one-year, $4,120 insurance policy on the machine was purchased on April 5. On April 19, Blossom paid $7,580 for installation and testing of the machine. The machine was ready for use on April 30. Blossom estimates the machine's useful life will be five years or 6,118 units with a residual value of $87,910. Assume the machine produces the following numbers of units each year: 893 units in 2021; 1,448 units in 2022; 1,426 units in 2023; 1,222 units in 2024; and 1,129 units in 2025. Blossom has a December 31 year end. (a) Your Answer Correct Answer Your answer is correct. Determine the cost of the machine. acer

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