Chapter 11, Problem 10PB

For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense:

A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years.

B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.