Question

In: Accounting

Assume that X incurs $180,000 in legal costs on March 1, 2017, to successfully defend a...

Assume that X incurs $180,000 in legal costs on March 1, 2017, to successfully defend a patent. The patent’s useful life is 12 years, amortized on a straight-line basis. The adjusting entry on December 31, 2017 is ------
Select one:
a. Dr. Depreciation expense $120,000 and Cr. Patent or Accumulated Amortization $120,000.
b. Dr. Depreciation expense $180,000 and Cr. Patent or Accumulated Amortization $180,000.
c. Dr. Amortization expense $12,500 and Cr. Patent or Accumulated Amortization $12,500.
d. Dr. Depreciation expense $16,000 and Cr. Patent or Accumulated Amortization $16,000.

Solutions

Expert Solution

Solution: Dr. Amortization expense $12,500 and Cr. Patent or Accumulated Amortization $12,500.

Working:

Particulars Debit Credit
Jan-01 Patents 180,000
Cash 180,000
(To record legal fees related to patent)
Dec-31 Amortization Expense (180,000 / 12 years) 15,000
Patents (or Accumulated Amortization) 15,000
(To record amortization of patent)

Nearest option selected

ekkarill92 answered 3 years ago
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