Mirabella Manufacturing

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Mirabella 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

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

Record amortization for the year

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