Mirabella Manufacturing
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Free InquiryMirabella Manufacturing spent several years developing a process for producing widgets. Its lawyer suggested patenting the process. Accordingly, the company proceeded to obtain the patent on January 1, 2016. The company paid $250,000 to the lawyer plus $25,000 to the government for the patent. In addition, other fees were incurred relating to the patent worth $5,000.
Required
a) Prepare the journal entry to record the full cost of the patent.
Do not enter dollar signs or commas in the input boxes.
Date |
Account Title and Explanation |
Debit |
Credit |
Jan 1 |
AnswerAccounts PayableAccounts ReceivableAccumulated AmortizationAllowance for Doubtful AccountsAmortization ExpenseBad Debt ExpenseBuildingCashEquipmentGain on Disposal of AssetInventoryLandLoss on Disposal of AssetMachine (New)Machine (Old)Notes PayableNotes ReceivablePatentsTruck |
Answer |
|
AnswerAccounts PayableAccounts ReceivableAccumulated AmortizationAllowance for Doubtful AccountsAmortization ExpenseBad Debt ExpenseBuildingCashEquipmentGain on Disposal of AssetInventoryLandLoss on Disposal of AssetMachine (New)Machine (Old)Notes PayableNotes ReceivablePatentsTruck |
Answer |
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Record the total relevant patent fees |
b) The patent has an estimated life of 20 years. Prepare the journal entry to record amortization for one year on December 31, 2016. Assume the straight-line method of depreciation is used.
Round your answers to the nearest whole number.
Date |
Account Title and Explanation |
Debit |
Credit |
Dec 31 |
AnswerAccounts PayableAccounts ReceivableAccumulated AmortizationAllowance for Doubtful AccountsAmortization ExpenseBad Debt ExpenseBuildingCashEquipmentGain on Disposal of AssetInventoryLandLoss on Disposal of AssetMachine (New)Machine (Old)Notes PayableNotes ReceivablePatentsTruck |
Answer |
|
AnswerAccounts PayableAccounts ReceivableAccumulated AmortizationAllowance for Doubtful AccountsAmortization ExpenseBad Debt ExpenseBuildingCashEquipmentGain on Disposal of AssetInventoryLandLoss on Disposal of AssetMachine (New)Machine (Old)Notes PayableNotes ReceivablePatentsTruck |
Answer |
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Record amortization for the year |
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