Question

On September 1, 2024. Enhance Company purchased a patent for $240,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only eight years. Read the requirements Requirement 1. Journalize the purchase of the patent. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Accounts and Explanation Date Debit Credit Sept. 1 Requirement 2. Journalize the amortization expense for the year ended December 31, 2024. Assume straight-line amortization Begin by calculating the amortization expense for 2024. Select the formula, enter the amounts and calculate the amortization expense. (Enter a "O" for items with a zero value. Do not round intermediary calculations. Only round the amount you input for straight-line amortization to the nearest dollar) Straight-line 10 +12) amortization 10 ) • 12) Now, journalize the amortization expense for 2024. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit Dec 31

Answer 1

Requirement 1:

Date Accounts Debit Credit

Sept. 1 Patent $240,000

Cash $240,000

Explanation: Purchased a patent for cash.

Requirement 2:

The annual amortization expense for the patent can be calculated as follows:

Amortization expense = (Cost of patent - Salvage value) / Useful life

where Cost of patent = $240,000, Salvage value = $0 and Useful life = 8 years.

Amortization expense = ($240,000 - $0) / 8 = $30,000 per year

Date Accounts Debit Credit

Dec 31 Amortization expense $30,000

Accumulated amortization - Patent $30,000

Explanation: Recorded annual amortization expense for the patent using straight-line method.

Answer 2

Amortization Expense - Patent 30,000

Patent 30,000

Step-by-step explanation:

For Requirement 1, the journal entry would be:

Sept. 1 Patent 240,000

Cash 240,000

For Requirement 2, the amortization expense for 2024 is calculated by dividing the cost of the patent by the estimated useful life: $240,000 ÷ 8 years = $30,000 per year. The journal entry for the amortization expense for 2024 would be recorded as follows:

Dec. 31 Amortization Expense - Patent 30,000

Patent 30,000