EX 10-20 Amortization entries

Voss Company acquired patent rights on January 6, 2011, for $480,000. The patent has a useful life equal to its legal life of eight years. On January 3, 2014, Voss successfully defended the patent in a lawsuit at a cost of $80,000.

a. Determine the patent amortization expense for the current year ended December 31, 2014.
b. Journalize the adjusting entry to recognize the amortization.


Answer:

a. ($480,000 ÷ 8) + ($80,000 ÷ 5) = $76,000 total patent expense 
b.

Amortization Expense—Patents 76,000
Patents 76,000
Amortized patent rights ($60,000 + $16,000).