SUCCESSFUL DEFENSE OF PATENT. In 19x1, Technocraft, Inc., acquired a patent that was used for manufacturing semiconductor-based electronic circuitry. The patent was originally recorded in Technocraft’s ledger at its cost of $1,796,000. Technocraft has been amortizing the patent over an expected economic life of 10 years.

Residual value was assumed to be zero. In 19x8 Technocraft sued another firm for infringing on its patent. Technocraft spent $180,000 on this suit and won a judgment to recover the $180,000 plus damages of $500,000. The sued firm paid the $680,000.

REQUIRED: :1. Compute and record 1 year’s amortization on the patent prior to the lawsuit.

2. Journalize the expenditure of $180,000 to defend the patent.

3. Journalize the award of $680,000.

4. Indicate the entry you would have made had Technocraft lost the suit. (Assume that the patent would be valueless if Technocraft had lost the suit.)