Question

Celine Dion Corp purchases a patent on 1/1/19 for $54,000. The patent has a remaining legal life of 20 years, with a residual value of $1,400. Compute the amount of amortization that Celine Dion would have to journalize during the first year after the patent was established.

Answer 1

Amortization expense per year for Patent = (Purchase cost-Residual Value)/Legal Life

= ($54,000-$1,400)/20 yrs = $2,630 per year

Journal Entry to record amortization expense for first year (Amounts in $)

Date	Account Titles and Explanations	Debit	Credit
12/31/19	Amortization Expense	2,630
	Patent		2,630
	(To record the amortization expense for first year)

Amortization expense is amortized using straight line method.(i.e. equal amount is amortized every year).

Therefore the amount of amortization that Celine Dion would have to journalize during the first year is $2,630.