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Miracle Printers (MP) manufactures printers. Assurne that MP recently paid $650,000 for a patent on a new laser printer. Although it gives legal protection for
Miracle Printers (MP) manufactures printers. Assurne that MP recently paid $650,000 for a patent on a new laser printer. Although it gives legal protection for 20 years, the patent expecled to provide a compelitive advantage for only ten years. Read the requirements. 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 i 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 five 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 6, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful life of seven years. Record amortization for Year 6. (b) Record the amortization for the first full year. Date Accounts and Explanation Debit Credit Print Done Requirement 2. After using the patent for five 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 6, to amortize the remaining cost of the patent over two remaining years, giving the patent a total useful life of seven years. Record amortization for Year 6. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit Date Accounts and Explanation Amortization ExpensePatent Assets Cash Depreciation ExpensePatent ) Recordt Gain on Disposal Goodwill Date Liabilities Loss on Disposal Notes Payable Patent Date Accounts and Explanation -) Recordt Date To record amortization of patent. To record impairment loss on patent. To record purchase of patent. To record purchase of the company
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