Question

7...

On January 1, 2018, Weaver Corporation purchased a patent for $270,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2020, the company incurred legal fees of $90,000 in successfully defending a patent infringement suit. The successful defense did not change the company’s estimate of useful life. Weaver Corporation’s year-end is December 31.

Required:

1. Record the purchase in 2018; amortization in 2018; amortization in 2019; legal fees in 2020; and amortization in 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

-Jan 01, 2018- Record the patent purchase.

-Dec 31, 2018- Record amortization on the patent

-Dec 31, 2019-Record amortization on the patent.

-Jan 01, 2020-Record legal fees on the patent infringement suit.

-Dec 31, 2019-Record amortization on the patent.

2. What is the balance in the Patent account at the end of 2020?

Answer 1

Calculation of depreciation on Dec31,2019 = (270,000-45,000-45,000+90,000) / 4 = $67,500