Medway Printers

(MP) manufactures printers. Assume that MP recently paid

$900,000 for a patent on a new laser printer. Although it gives legal protection for 20years, the patent is expected to provide a competitive advantage for only eight

eight years.

Requirements

1.

Assuming thestraight-line method ofamortization, make journal entries to record(a) the purchase of the patent and(b) amortization for the first full year.

2.

After using the patent for four

four years, MP learns at an industry trade show that another company is designing a more efficient printer. On the basis of this newinformation, MPdecides, starting with year 5

5, to amortize the remaining cost of the patent over two remainingyears, giving the patent a total useful life of six

six years. Record amortization for year 5

5.

Requirement 1. Assuming thestraight-line method ofamortization, make journal entries to record(a) the purchase of the patent and(b) amortization for the first full year. (Record debitsfirst, then credits. Select the explanation on the last line of the journal entrytable.)

Medway Printers (MP) manufactures printers. Assume that MP recently paid $900,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent is expected to provide a competitive advantage for only eight eight years. Requirements 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. 2. After using the patent for four four years, MP learns at an industry trade show that another company is designing a more efficient printer. On the basis of this new information, MP decides, starting with year 5 5, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful life of six six years. Record amortization for year 5 5. Requirement 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Requirement 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for the first full year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) (a) Record the purchase of the patent. Date Accounts and Explanation Debit Credit Debit Credit (b) Record the amortization for the first full year. Date Accounts and Explanation Requirement 2. After using the patent for fourfour years, MP learns at an industry trade show that another company is designing a more efficient printer. On the basis of this new information, MP decides, starting with year 55, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful life of sixsix years. Record amortization for year 55. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit