Requirement 1. Assuming the straight-line method of amortization, make journal e

Question

Requirement 1. Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for year 1. Requirement 2. After using the patent for five years, Morgan Printers learns I had an industry trade show that fastest printers is designing a more efficient printer. On the basis of this make mission Morgan printer is determined to be expected future cash flow's from the patina only $670,000. It's fair value on the open market is zero. is this asset impaired? if so, make the impairment adjusting entry. rnal costs of $1,500,000 for a patent for a new laser printer. Although the patent gives legal Printers with a competitive advantage for only ten years. e straight-line method of amortization, make journal entries to record (a) the purchase of the rd debits first, then credits. Exclude explanations from any journal entries.) hase of the patent i Requirements Assuming the straight-line method of amortization, make journal entries to record (a) the purchase of the patent and (b) amortization for year 1. After using the patent for five years, Morgan Printers learns at an industry trade show that Fastest Printers is designing a more efficient printer. On the basis of this new information, Morgan Printers determines that the expected future cash flows from the patent are only $670,000. Its fair value on the open market is zero. Is this asset impaired? If so, make the impairment adjusting entry 1. 2. Print Done he patent for five years, Morgan Printers leams at an industry trade show that Fastest Printe of this new information, Morgan Printers determines that the expected future cash flows fron r any number in the input fields and then continue to the next question.

Explanation / Answer

1)Amortisation =Patent /useful life

              = 1500000/10

               = $ 150,000

b)Total amortisation for 5 years : 150000*5 = 750000

carrying value of bond : 1,500,000- 750,000 = 750,000

Net recoverable amount :higher of fair value of asset or value in use

                            higher of 0 or 670000

                               670000

since the net recoverable amount is less than carrying value ,patent is impaired

Impairment loss = 670000-750000 = - 80000

Date Account Debit credit a Patent 1,500,000 cash 1,500,000 [Being patent purchased b Amortisation expense 150,000 Patent 150,000 [first year patent amortisation recorded]

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.