Question

On July 1, Sterns Co. acquired patent rights for $36,000. The patent has a useful life of 6 years and a legal life of 15 years.

Required:
Journalize the adjusting entry on December 31 to recognize the amortization. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Dr Amortization Expense $3,000

Cr Patents $3,000

Step-by-step explanation:

Preparation of the journal adjusting entry on December 31 to recognize the amortization.

Dec. 31

Dr Amortization Expense $3,000

Cr Patents $3,000

(To record Amortization)

Amortization=(Patent rights/Useful life)*6/12

Amortization=($36,000/6)*6/12

Amortization=$3,000

(July 1 to Dec 31 =6months)