Question

During 2013, Bridgeport Corporation spent $148,320 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2013, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $23,760 related to the patent were incurred as of October 1, 2013.

Prepare all journal entries required in 2013 and 2014 as a result of the transactions above.

On June 1, 2015, Bridgeport spent $12,960 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2015. Prepare all journal entries required in 2015 and 2016.

In 2017, Bridgeport determined that a competitor’s product would make the New Age Piano obsolete and the patent worthless by December 31, 2018. Prepare all journal entries required in 2017 and 2018.

Answer 1

	Bridgeport Corporation
	Amount spent of resarch & development	148320
	Patent was obtained	1 Oct,2013
	Legal life of patent	20	Years
	Useful life of patent	10	Years
	Legal cost related to Patent incurred on 1,October 2013	$     23,760.00
	General ,Journal
	Particular	Amt(Dr)	Amt (Cr)
2013	Research & Development	$ 1,48,320.00
	To Cash		$ 1,48,320.00
	(Being amount spent on R& D)
2013	Patent	$     23,760.00
	To Cash		$     23,760.00
	(Being amount spent on legal cost related to Patent)
2013	Patent Amortization =($23760/10)*3/12	$           594.00
	To Patent		$           594.00
	(Being amount of Amortization of Patent)
2014	Patent Amortization =($23760/10)	$       2,376.00
	To Patent		$       2,376.00
	(Being amount of Amortization of Patent)
2015	Patent	$     12,960.00
	To Cash		$     12,960.00
	(Being amount spent on successfully prosecute Patent infringement suit)
2015	Patent Amortization	$       2,582.50
	To Patent		$       2,582.50
	(Being amount of Amortization of Patent)
	Working	Patent (1)	Patent (2)
	Patent	$     23,760.00	$     12,960.00
	2013	$           594.00
	2014	$       2,376.00
	2015=($2376*5/12) from 1st jan to 31st May	$           990.00
	2015( ($23760-$594-$2376-$990)/12)*7/12,($12960/12)*7/12	$           962.50	$           630.00
	2016=($23760-$594-$2376-$990)/12,($12960/12)	$       1,650.00	$       1,080.00
	1st Jan to 31st May for 5 Months=	$           990.00
	1st June to 31st Dec for 7 months=(($23760-$594-$2376-$990+$12960)/12)*7/12	$       1,592.50
	Total Amortization($990+$962.50+$630)	$       2,582.50
2016	Patent Amortization	$       2,730.00
	To Patent		$       2,730.00
	(Being amount of Amortization of Patent)
2017 and 2018	Patent Amortization =($23760-$594-$2376-$990+$12960-$962.5-$630-$1650-$1080)*(2/12)	$     14,218.75
	To Patent		$     14,218.75
	(Being amount of Amortization of Patent)
	Working
	Patent balance in 2017
		Patent (1)	Patent (2)	Total
	Cost	$     23,760.00	$     12,960.00
	Amortization in 2013	$           594.00
	Amortization in 2014	$       2,376.00
	Amortization in 2015	$       1,952.50	$           630.00
	Amortization in 2016	$       1,650.00	$       1,080.00
	Total Amortization	$       6,572.50	$       1,710.00
	Patent beginning balance in 2017	$     17,187.50	$     11,250.00	$ 28,437.50
	Amortization=($28437.50)/2	$     14,218.75