Question

During 2016, Flint Corporation spent $171,360 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, 2016, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $45,360 related to the patent were incurred as of October 1, 2016.

(1)Prepare all journal entries required in 2016 and 2017 as a result of the transactions above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

  

  

(2)On June 1, 2018, Flint spent $11,160 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2018. Prepare all journal entries required in 2018 and 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

  

  

(3)In 2020, Flint determined that a competitor’s product would make the New Age Piano obsolete and the patent worthless by December 31, 2021. Prepare all journal entries required in 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

Answer 1

Date	Particulars	Dr	Cr
01 October 2016	Reasearch & Devlopment Expense	171360
	Cash		171360
	To record the reasearch and devlopment expense
01 October 2016	Patent	45360
	Cash		45360
	To record capitalization of patent
31 December 2016	Patent amortization expense	1134
	Patent		1134
	To record the amortization expense
	($45,360 x 1/10 x 3/12)
31 December 2017	Patent amortization expense	4536
	Patent		4536
	To record the amortization expense
	($45,360 x 1/10)
01 June 2018	Patent	11160
	Cash		11160
	To record capitalization of patent
01 June 2018	Patent amortization expense	1890
	Patent		1890
	To record the amortization expense
	($45,360 x 1/10 x 5/12)
31 December 2018	Patent amortization expense	2380
	Patent		2380
	To record the amortization expense
	($45,360 - $1,134 - $4,536 - $1,890 + $11,160)=$48,960
	$48,960 x 1/12 x 7/12
31 December 2019	Patent amortization expense	4080
	Patent		4080
	To record the amortization expense
31 December 2020	Patent amortization expense	21250
	Patent		21250
	To record the amortization expense
	($48,960 - $2,380 - $4,080)/2
31 December 2021	Patent amortization expense	21250
	Patent		21250
	To record the amortization expense