Connect CSecure https//newconnect.mheducation.com/flow/connect.html Ch. 20 - Bri

Question

Connect CSecure https//newconnect.mheducation.com/flow/connect.html Ch. 20 - Brief Exercises (60 minutes) G Help Save & Exlt Submlt Saved Check my work Brief Exercise 20-8 Change in estimate; useful life of patent [LO20-4] Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized the $20.70 million cost of the patent on a straight-line basis since it was acquired at the beginning of 2014. Due to rapid technological advances in the industry, management decided that the patent would benefit the company over a total of six years rather than the nine-year life being used to amortize its cost. The decision was made at the end of 2018 (before adjusting and closing entries). 10 points eBook What is the appropriate adjusting entry for patent amortization in 2018 to reflect the revised estimate? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to2 decimal places (i.e., 5,500,000 should be entered as 5.50).) References View transaction list View journal entry worksheet No Event General Journal Debit Credit Amortization expense Patent Mc Graw Hill ?Prey 7or 10?Next> 846 PM 4/23/2018

Explanation / Answer

Patent was acquired at the beginning of 2014.

Cost = $ 20.70 million

Amortisation exp. charged each year = $ 20.70 million / useful life of 9 years = $ 2300000

Amortisation exp. charged till the beginning of 2018 = $ 2300000 * 4 years = $ 9200000

Book value of patent at the beginning of 2018 =  $ 20.70 million - $ 9200000 = $ 11500000

Remaining life = ( 6 - 4 ) = 2 years

Amortisation exp.to be charged each year = $ 11500000 / 2 years = $ 5750000

Journal entry :-

Amortisation expense $ 5750000 Patent $ 5750000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

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