Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part 1 X Company acquired a patent on July 1, Year 1. On the date of acquisition, the patent had a remaining legal life of

Part 1

X Company acquired a patent on July 1, Year 1. On the date of acquisition, the patent had a remaining legal life of 12 years and a fair value Of $120,000.X Company made a cash payment of $20,000 and signed a 5-year, 6%, $80,000 note to acquire the patent. The note required five equal annual payments. X Company believes that the product under patent was marketable for another 10 years from the date of acquisition.

Determine the carrying value of the patent on December 31, Year 2.

Part 2

X Company acquired a patent on July 1, Year 1. On the date of acquisition, the patent had a remaining legal life of 12 years and a fair value of $120,000. X Company made a cash payment of $20,000 and signed a 5-year. 6%, $80,000 note to acquire the patent. The note required five equal annual payments. X Company believes that the product under patent was marketable for another 10 years from the date of acquisition.

On January 1, Year 3, X Company revised its estimate of the patient's life to be 12 years from the date of acquisition.

Determine the carrying value of the patent on December 31, Year 3.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistical Sampling And Risk Analysis In Auditing

Authors: Peter Jones

1st Edition

1138263214, 978-1138263215

More Books

Students also viewed these Accounting questions