Question

Suppose that on January 1, 2016 PepsiCo purchased a patent on a production process and it expected that this patent would have value for 10 years. The patent was recorded on the books for $4,800,000.

Required:
What will the entry look like to record amortization for the month of January, 2016?

Answer 1

Dr Amortization Expense $40,000

Cr Accumulated Amortization (contra-asset account) $40,000

Step-by-step explanation:

Preparation of What will the journal entry look like to record amortization for the month of January, 2016

Based on the information given What the journal entry will look like to record amortization for the month of January, 2016 is :

Dr Amortization Expense $40,000

Cr Accumulated Amortization (contra-asset account) $40,000

10 years will give us 120 months (10 years*12 months)

Hence,

$4,800,000/120 months

= $40,000