Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Strawberry Company is in the business of inventing kitchen gadgets. In developing a tool to assist with the dipping of fruit into liquid chocolate,

Strawberry Company is in the business of inventing kitchen gadgets. In developing a tool to assist with the dipping of fruit into liquid chocolate, the company incurred the following costs: research & development $50,000, and patent registration costs $1500. Further, the company spent $500,000 to market the device (TV ads, door-to-door flyers, trade shows, etc.). The estimated useful life of the patent is the full 30 years. 15 years after registering the patent, Strawberry Company sells the patent to Apple Inc. for $20,000. Required: Calculate the amount of amortization of the patent that would be recorded each year on the books of Strawberry Company. Record the journal entry necessary on Strawberry Company's books to show the sale of the patent to Apple Inc. Assume that Apple pays cash for the patent. Show all calculations.

Step by Step Solution

3.40 Rating (150 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the amount of amortization of the patent we need to determine the total cost of the patent and divide it by its estimated useful life The ... 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

Managerial Accounting Creating Value in a Dynamic Business Environment

Authors: Ronald Hilton, David Platt

10th edition

78025664, 978-0078025662

More Books

Students also viewed these Accounting questions

Question

Describe effectiveness of reading at night?

Answered: 1 week ago

Question

find all matrices A (a) A = 13 (b) A + A = 213

Answered: 1 week ago