for only ten years due to expected technological advances in the industry. Morgan uses the straight$-$line method of amortization.

$($Click the icon to view additional information.$)$

Read the requirements.

More info

Requirement $1.$ Make journal entries to record $($a$)$ the purchase of the patent and $($b$)$ amortization for year $1.$

Start by recording $($a$)$ the purchase of the patent.

Journal Entry

$\backslash$table$[[,$Accounts$],[,],[,]]$

After using the patent for five years, Morgan learned at an industry trade show that Speedy Printers has patented a more efficient printer and will be selling this printer next quarter. Because of this new information, Morgan determined that the expected future cash flows from its patent were now only $$670,000.$ The fair value of Morgan's patent on the open market was now zero.

Requirements

Make journal entries to record $($a$)$ the purchase of the patent and $($b$)$ amortization for year $1.$

Once Morgan learned of the competing printer and adjusted the expected future cash flows from its original patent, was this asset impaired? If so$,$ make the impairment adjusting entry.

Etext pages Get more help $-$