Question

On May 1, 2014, Terry Company bought a competitor’s patent for $80,000 and began amortizing it over a five-year estimated useful life. At the beginning of the fiscal year 2016, Tech paid $17,400 of litigation costs in a successful patent infringement case. Based on that outcome, Terry Company concluded that the patent would continue to be useful for another eight years from that date (i.e., another eight years from the date of the successful litigation, the beginning of fiscal 2016). Tech calculates amortization to the nearest whole month. Required—Prepare all patent-related journal entries that Tech should have recorded from May 1, 2014 through its fiscal 2016 year-end.

Answer 1