Question

a patent was purchased for $20,000 and expected to be used for the 20-year life with no salvage value. the entry to expense the patent during the second year of life will include which of the following entries? (check all that apply.) multiple select question. credit to amortization expense $1,000. credit to accumulated amortization $1,000. debit to amortization expense $1,000. debit to accumulated amortization $1,000.

Answer 1

The correct entries to expense the patent during the second year are debiting amortization expense for $1,000 and crediting accumulated amortization for $1,000, reflecting the yearly allocation of the patent's cost over its 20-year lifespan.

Step-by-step explanation:

The entry to expense the patent during the second year of life when the patent was purchased for $20,000 with a 20-year life and no salvage value involves two main entries. These entries are:

• Debit to amortization expense $1,000.
• Credit to accumulated amortization $1,000.

Since the cost of the patent is to be evenly expensed over its useful life, which is 20 years in this case, the annual amortization expense would be $1,000 ($20,000 cost divided by 20 years). This expense is recognized each year to gradually reduce the value of the patent on the balance sheet and reflect its consumption on the income statement.