Final answer:
The first year’s amortization expense for the patent is $19,750. On the balance sheet at the end of the first year, the book value of the patent will be listed under non-current assets at $138,250.
Step-by-step explanation:
The amortization expense of a patent is calculated by dividing its cost by the estimated useful life. Since Blossom Company acquired the patent for $158,000 and estimates its useful life as 8 years, we calculate the annual amortization expense by dividing the cost by the useful life.
Amortization Expense Calculation
Amortization Expense = Cost of Patent ÷ Estimated Useful Life
Amortization Expense = $158,000 ÷ 8
Amortization Expense = $19,750
The first year's amortization expense for the patent is $19,750.
Balance Sheet Reporting
At the end of the first year, Blossom Company would report the patent in the assets section of the balance sheet at its book value, which is the original cost minus any accumulated amortization.
Book Value of Patent at End of First Year = Original Cost - Accumulated Amortization
Book Value of Patent at End of First Year = $158,000 - $19,750
Book Value of Patent at End of First Year = $138,250
The balance sheet will list the patent under non-current assets at a value of $138,250 after the end of the first year.