Intangible Assets

On January 1, 2020, Higley Company purchased a patent for $600,000. Higley expects to use the patent for 20 years and amortizes the patent using the straight-line method. Higley incurs $50,000 in legal costs to successfully defend the patent on January 1, 2023. Higley estimates that the remaining useful life of the patent to be 5 years.

Instructions:

A) Prepare all necessary journal entries for 2020 through 2023.

B) How would your answer change if the defense of the patent was unsuccessful?