Valley Tech Corporation purchased a patent from Nexus Labs on January 1, 2022, for $90,000. The patent has a remaining legal life of 15 years, but Valley Tech estimates it will be useful for only 8 years. As of January 1, 2024, the patent's carrying amount on Valley Tech's books is $67,500. In February 2024, Valley Tech spent $15,000 successfully defending the patent in court. Valley Tech still believes the patent will be useful through the end of 2029. Prepare Valley Tech's journal entries to record the amortization for 2022 and 2024.
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- On January 1, 2020, Purple Inc. purchased a patent for $33, 300. Legal fees paid in this purchase amounted to $1,700. The legal remaining life of the patent is 14 years, but Purple believes it will only help increase sales for the next 10 years. On January 1, 2023, Purple was sued for patent infringement and had to spend $4,900 of legal fees in the successful defense of this patent. What is the book value of this patent on December 31, 2023? Select one: a. $24,500 b. $21,000 c. $ 25,200 d. $30, 240 e. $19,600On January 1, 2023, Everest Textiles acquired a patent for $300,000 giving it the right to manufacture a new eco-friendly fiber. The patent had a remaining legal life of 14 years, but Everest expects to use it for 7 years. Additionally, Everest purchased machinery for $120,000 to process the fiber. The machinery has a physical life of 10 years, but Everest will use it only for 7 years, at which point it expects to sell it for $30,000. The company applies straight-line amortization and depreciation. What is the total amount to expense in 2026 related to the patent and machinery?A patent was acquired by Renfro Corporation on January 1, 2014, at a cost of $90,000. The useful life of the patent was estimated to be 10 years. At the beginning of 2017, Renfro spent $15,000 in successfully defending an infringement of the patent. At the beginning of 2018, Renfro purchased a patent for $22,000 that was expected to prolong the life of its original patent for 5 additional years. Instructions Calculate the following amounts for Renfro Corporation. (а) Amortization expense for 2014. The balance in the Patent account at the beginning of (b) 2017, immediately after the infringement suit. Amortization expense for 2017. (c) The balance in the Patent account at the beginning of (d) 2018, after purchase of the additional patent. Amortization expense for 2018. (e)
- Oriole Corporation purchases a patent from Pharoah Company on January 1, 2020, for $73,920. The patent has a remaining legal of 16 years. Oriole feels the patent will be useful for 10 years. Assume that at January 1, 2022, the carrying amount of the patent on Oriole's books is $59,136. In January, Oriole spends $17,600 successfully defending a patent suit. Oriole still feels the patent will be useful until the end of 2029. Prepare Oriole's journal entries to record the amortization for 2020 and 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 2020 2022MunabhaiBlue Incorotation has a patent that will expire at the end of 2025. They spent $100,000 to successfully prosecute an infringement suit on July 1, 2018. The carrying value of this patent before the litigation is $300,000. Write journal entries to record for these activities.
- Culver Products Ltd. purchased a patent on January 1, 2020, for $840,000. At the time of the purchase, the patent had a remaining legal life of 15 years. In January, 2023, Culver spent $372,000 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 9 years. Culver's year-end was December 31. Prepare the entries on the books of Culver Ltd. to record (a) the purchase of the patent, (b) amortization for the first year (2020), (c) the defense of the patent, and (d) amortization for 2023. (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. List all debit entries before credit entries.) No. Account Titles and Explanation (a) (b) (c) (d) Debit CreditOn January 4, 2015, a research project undertaken by Nasja Ltd. was completed and a patent was approved. The research phase of the project incurred costs of $150,000, and legal costs incurred to obtain the patent approval were $20,000. The patent is assessed to have a useful life to 2025, or for ten years. Early in 2016, Nasja successfully defended the patent against a competitor, incurring a legal cost of $22,000. This set a precedent for Nasja who was able to reassess the patent’s useful life to 2030. During 2017, Nasja was able to create a product design that was feasible for commercialization, but no more certainty was known at that time. Costs to get the product design to this stage were $250,000. Additional engineering and consulting fees of $50,000 were incurred to advance the design to the manufacturing stage. Nasja follows IFRS. Required: a. Prepare all the relevant journal entries for the project for 2015 to 2017, inclusive. b. What is the accounting treatment for the…Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the patent on a straight-line basis since 2020, when it was acquired at a cost of $21.6 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the beginning of 2024. Required: Prepare the year-end journal entry for patent amortization in 2024. No amortization was recorded during the year. Record amortization expense
- In 2015, Kingston Technologies' research and development department developed a new software algorithm. The research and development costs totaled $95,000. The software was patented on July 1, 2015. Legal costs to acquire the patent were $13,500. Kingston decided to amortize the patent over a 15-year period. Kingstons fiscal year ends on June 30. On July 1, 2020, a competitor released a new software that rendered Kingston's patent obsolete. 1. How much amortization expense should Kingston report in each year through the year ended June 30, 2020? 2. What amount of loss should Kingston report in the year ended June 30, 2021?Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the patent on a straight-line basis since 2020, when it was acquired at a cost of $27.0 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the beginning of 2024. Required: Prepare the year-end journal entry for patent amortization in 2024. No amortization was recorded during the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.5). 1 No > Answer is complete but not entirely correct. Event General Journal 1 Amortization expense Patent Debit Credit 7,500,000.00 7,500,000.00Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the patent on a straight- line basis since 2020, when it was acquired at a cost of $20.7 million at the beginning of that year. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the beginning of 2024. Required: Prepare the year-end journal entry for patent amortization in 2024. No amortization was recorded during the year Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.5).