Question

On January​1, Blue Manufacturing paid $ 30 comma 000 for a patent. Although it gives legal protection for 20​ years, the patent is expected to provide a competitive advantage for only five years. Assuming the​ straight-line method of​ amortization, record the journal entry for amortization for Year 1.

Answer 1

Amortization expense $6,000

To Patent $6,000

(Being the amortization expense is recorded)

Step-by-step explanation:

The journal entry is shown below:

Amortization expense $6,000

To Patent $6,000

(Being the amortization expense is recorded)

The computation is shown below:

= Paid amount ÷ number of years

= $30,000 ÷ 5 years

= $6,000

While recording this transaction we debited the amortization expense as it increased the expenses account and credited the patent account as it decreased the asset account